Avis chief to make an early exit as first-half profits slide

Mark McCafferty, the chief executive of Avis Europe, signalled his intention to step down from the post yesterday as the car rental company unveiled a 69 per cent slump in first-half profits.

Mr McCafferty, who has been in the job for five years and who was paid a £365,541 salary last year, is not thought to have come under any pressure to leave.

He is expected to stay on at Avis Europe until early next year and is particularly interested in looking at opportunities in the private equity market.

His departure was flagged as Avis Europe reported a pre-tax profit of €15.3m (£10.7m) in the six months to 30 June, down from a profit of €49.5m in the same period a year before.

The company has been hurt by the effects of the Iraq conflict and continuing tough economic conditions which have forced customers to cut travel budgets. Shares in Avis Europe closed down 7p at 109p last night.

The company also reiterated guidance given in June, saying it expected revenues for the full year to be between 4 per cent and 7 per cent below 2002.

While it said the corporate market had stabilised, Avis Europe said it was not assuming any "near-term marked recovery in demand or pricing".

Sir Bob Reid, the chairman, said: "The Iraq conflict inevitably had a significant effect on the first half ... market demand showed signs of recovery from the second quarter, with the exception of long-haul travel, although prices were still weaker than the prior year."

He said that summer trading had met expectations and that the corporate market had stabilised. "Overall, we expect full-year revenues, excluding budget, to be 4 per cent to 7 per cent lower than 2002, in line with our trading update in June," he said.

As announced in June, the company cut its dividend to 1.3p a share from 2p a share last year. It said it intended to rebuild cover to "more normal levels" during the next two to three years.