Avis Budget Extends International Airlines Group Partnership

Vehicle rental & leasing services provider Avis Budget Group, Inc. (NASDAQ:CAR) recently extended its strategic partnership with International Airlines Group (LON:ICAG). The collaboration is likely to strengthen Avis Budget’s business relationship with the multinational airline holding company and ensure a steady revenue stream.

International Airlines Group is reportedly the third largest group in Europe and the sixth largest in the world based on revenues with 547 aircraft flying to 268 destinations and carrying more than 100 million passengers each year. It is the parent company of Aer Lingus, British Airways, Iberia and Vueling — the leading airlines in Ireland, the U.K. and Spain.

Avis Budget has had business tie-ups with International Airlines Group for more than two decades through Iberia Plus loyalty program, Avios Travel Rewards Program and the British Airways Executive Club. Over the years, the company has offered a complete range of car rental services to airline customers across the globe for a seamless travel experience.

In order to take their association to the next level, the company inked a new business agreement with International Airlines Group. Per the exclusive multi-year deal, both Avis Car Rental and Budget Car Rental will be available for booking through British Airways, Iberia and Iberia Express. Aer Lingus is also expected to follow suit very shortly. Furthermore, the renewed agreement will offer exclusivity with British Airways Executive Club, Aer Club, Iberia Plus and the Avios Travel Rewards Program.

Avis Budget has underperformed the industry with an average year-to-date return of 7.8% compared with a gain of 15.5% for the latter. We envision strong U.S. demand trends for the company as travel volumes continue to perform well. Anticipating strong travel trends for both leisure and commercial travelers and projecting sustained expansion of these trends, we believe that Avis Budget’s various acquisitions and collaborations will enhance its operational foothold in global markets. Moreover, sustained productivity growth, implementation of pricing initiatives and potential revenue-generating synergies from its various acquisitions bode well for the future.

Avis Budget currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include SGS SA (OTC:SGSOY) , Capita plc CTAGY and SECOM CO., LTD. (OTC:SOMLY) , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SGS SA has a long-term earnings growth expectation of 6%.

Capita plc is currently trading at a P/E of 11.4x.

SECOM is currently trading at a P/E of 20.2x

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