Who is Avis Budget Group?
Avis Budget Group operates one of the largest vehicle rental platforms in the Americas, deploying a rotating fleet of approximately 684,000 vehicles. The business generated $11.65 billion in revenue in 2025, with the Americas region accounting for 76% of that total. Since early 2025, three of the company's most consequential roles have been held by individuals with direct or former ties to SRS Investment Management: CEO Brian Choi, appointed in February 2025, and Executive Chairman Jagdeep Pahwa, elevated in March 2025.
Business Model
Fugazi frames Avis as a debt-financed asset cycle rather than a traditional rental operator. The company deploys roughly $15.1 billion annually to acquire its rotating fleet, financing that fleet through $19.2 billion in asset-backed vehicle program debt at a weighted average rate of 5.29%. Revenue is generated against that asset base before the vehicles are sold, ideally before depreciation destroys residual value. The model worked while used-vehicle prices and daily rental rates were elevated post-pandemic, but those tailwinds have reversed: vehicle depreciation and lease charges rose 73% between 2023 and 2025, and Americas Adjusted EBITDA collapsed 75% from $2.2 billion to $552 million over the same period.
Fugazi Research's Key Allegations
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01
Over nine years, SRS Investment Management increased its stake in Avis from roughly 20% to 45% without paying a control premium. The company deployed $10.75 billion into share buybacks — including $3.3 billion in 2022 alone, partly funded by a new $750 million floating-rate term loan that year — mechanically compressing the float from approximately 60 million shares to 35.26 million and concentrating ownership in SRS's hands. Fugazi characterizes the sequence as control acquired with the company's own capital rather than through an arm's-length transaction.
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02
Avis carries $25.3 billion in total indebtedness against negative stockholders' equity of $3.1 billion, with corporate leverage running at roughly 8x adjusted EBITDA — more than three times the 2.5x first-lien covenant threshold. Total corporate and vehicle interest expense of $1.34 billion sits against adjusted EBITDA of just $748 million, implying an all-in coverage ratio of 0.56x. On a GAAP basis, coverage is negative.
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03
Management's primary performance metric, adjusted EBITDA, has been redefined repeatedly to exclude costs directly tied to the core operating model. In 2024, $2.47 billion of fleet impairments were excluded; in 2025, a further $518 million was excluded alongside a newly created "other fleet charges" category that removed $390 million of vehicle disposal losses. Fugazi argues a metric that requires a new exclusion each time a recurring cost grows too large does not reflect operating performance — it obscures it.
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04
A Delaware Court of Chancery shareholder derivative action alleged five counts against Avis directors, officers and SRS, including insider trading on material non-public information about vehicle delays in 2022 and 2023, approval of share buybacks that transferred control, improper disclosure of a cooperation agreement, breach of oversight duties and unjust enrichment. The case was dismissed in December 2025 on procedural grounds of futility, not on the merits. The presiding judge's opinion acknowledged SRS's influence as a governance concern requiring oversight.
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05
SRS's disclosed direct position of approximately 17.4 million shares alone exceeded the entire non-affiliate float of roughly 16.76 million, while Pentwater Capital held an additional 7.8 million shares — a combined long position more than 8.5 million shares greater than the non-affiliate float. Fugazi argues that "prisoners' dilemma" held the stock at prices disconnected from fundamentals until April 22, 2026, when the structure collapsed 40% in a single session. The report's thesis is that with the leveraged long overhang liquidated, CAR must now be priced on fundamentals alone.
Key Charts
Total corporate and vehicle interest expense of $1.34 billion against adjusted EBITDA of $748 million implies an all-in coverage ratio of 0.56x. The business generates 56 cents of adjusted earnings for every dollar of interest owed. On a GAAP basis, coverage is negative.
Americas Adjusted EBITDA declined 75% over two years as vehicle depreciation and lease charges rose 73% from $1.74 billion to $3.02 billion, while daily rental rates softened and the used-vehicle tailwind that produced $656 million of net gains on vehicle sales in 2023 reversed.
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