Hertz is in talks with its lenders to avoid defaulting on debt related to its rental vehicle fleet after missing a payment due on April 27.

The car hire giant, which includes the Dollar and Thrifty rental brands, has suffered a “rapid, sudden and dramatic negative impact” on its business since the onset of the Covid -19 pandemic in March.

The firm cut its North American workforce by 10,000 earlier in April at a cost of $30 million in severance or termination payments plus costs relating to healthcare.

The company then said in a filing to the US Securities and Exchange Commission this week: “In light of the impact of the pandemic and the uncertainty about the timing and strength of any recovery in the company’s markets, the company is taking aggressive actions to preserve liquidity to support its ongoing operations.”

While Hertz has taken “aggressive action” to eliminate costs, it faces “significant ongoing operating expenses”, including monthly payments under its vehicle operating lease agreement for its US fleet.

“In this regard, the company has been engaged in discussions with certain of its senior credit facility lenders and certain of the holders of its vehicle finance subsidiary’s notes, among other things, to temporarily reduce the required payments under the operating lease,” Hertz added.

“As those discussions have continued, on April 27, 2020, Hertz did not make certain payments in accordance with the operating lease.

“If such payments are not made by the end of a grace period on May 4, 2020, and a sufficient amount of Hertz’ senior credit lenders and VFN noteholders do not agree to waive any resulting default or forbear from exercising remedies, Hertz could be materially and negatively impacted.”

The company is in ongoing discussions with lenders to reduce its obligations under the operating lease and “avoid certain consequences of the payments not made on April 27”.