Avis Europe plc Preliminary Results for the Year Ended December 31, 1998

Business Wire, Feb 24, 1999

This acquisition, which is expected to be earnings enhancing in year one, provides a natural synergy to expand our replacement car activities in a fast growing niche within the overall replacement market, as well as providing a potential springboard into other European markets.

Strong Operating Efficiencies

The Group continued to increase operating efficiencies during 1998, with operating margin improving to 22.1% from 20.1% last year. ECU revenue growth and another significant increase in employee productivity - up 5.8% - were the principal contributors to this performance. During the 1990's the Group has increased productivity by a compound annual growth rate (CAGR) of 5% and we shall continue to find innovative ways of using operational skills and technology to drive further efficiency gains in the years ahead.

This margin increase to 22.1% was achieved despite vehicle utilization remaining at similar levels to prior year following three years of growth, and despite increases in fleet costs which, as anticipated, continue to rise ahead of revenue.

We continue to prioritize investment in information technology in order to increase operating efficiencies and to enhance service delivery. Development of enhanced fleet management systems in 1998 improved the quality of information and control on the purchase and disposal of fleet and these were successfully piloted in Italy. Implementation of new Windows-based functionality for reservation booking contributed to increased efficiencies in the UK call center.

Virtual learning and the new media training program for front line staff started to produce significant results in cost efficiency and enhanced service delivery. Since their launch in April 1998, more than 150 rental staff in the UK have achieved the required performance levels in one third of the time previously taken to train new staff. The system is currently being implemented in an additional 40 countries across the network.

System enhancements to handle the introduction of the Euro were successful, providing on line reservation quotations and billing facilities from January 1, 1999. We can now provide customers with rental quotes and agreements in local currency and the Euro and over 1,000 Euro invoices have been issued during January.

We have carried out a thorough review of our systems to ensure full millennium compliance and are confident that our business critical systems will be Y2K compliant before the end of the year.

Investment in Network Development

Network development remains a priority for the Group and we have continued to pursue opportunities to invest in an extension of our Asian network to create the potential for long term growth in the years ahead.

During the last quarter of 1998 we increased our interest in Singapore. This provides us with a strategic base within the Asian region.

I am delighted to announce that we have recently completed negotiations to establish Avis Rent A Car activities in India through the appointment of a licensee. The Avis licensee will operate under a joint venture arrangement.