(Operator Instructions) Welcome to the Avis Budget Group First Quarter Earnings Conference Call. At this time for opening remarks and introductions, I would like to turn the conference over to Mr. David Crowther, Vice President of Investor Relations.

On the call with me are our Chairman and Chief Executive Officer Ron Nelson, our President and Chief Operating Officer Bob Salerno, our Executive Vice President and Chief Financial Officer David Wyshner. If you did not receive a copy of our press release, it's available on our website at www.avisbudgetgroup.com. Before we discuss our results for the quarter, I would like to remind everyone that the company will be making statements about future results and expectations which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations in the current economic environment and are inherently subject to significant economic, competitive, and other uncertainties and contingencies beyond the control of management. You should be cautioned that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward looking statements are specified in our 10-K, and in our earnings release issued last night. Also, certain non-GAAP financial measures will be discussed and these measures are reconciled to the GAAP numbers in our press release which is posted on our website. Now I'd like to turn the call over to Avis Budget Group's Chairman and Chief Executive Officer Ron Nelson.

On the call with me are our Chairman and Chief Executive Officer Ron Nelson, our President and Chief Operating Officer Bob Salerno, our Executive Vice President and Chief Financial Officer David Wyshner. If you did not receive a copy of our press release, it's available on our website at www.avisbudgetgroup.com. Before we discuss our results for the quarter, I would like to remind everyone that the company will be making statements about future results and expectations which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations in the current economic environment and are inherently subject to significant economic, competitive, and other uncertainties and contingencies beyond the control of management. You should be cautioned that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward looking statements are specified in our 10-K, and in our earnings release issued last night. Also, certain non-GAAP financial measures will be discussed and these measures are reconciled to the GAAP numbers in our press release which is posted on our website. Now I'd like to turn the call over to Avis Budget Group's Chairman and Chief Executive Officer Ron Nelson.

I’m going to start this morning by providing some context for our first quarter results. Demand for domestic travel services including car rental was extraordinarily weak in the first quarter. Year over year decline in our domestic volume was greater then it was in the fourth quarter, greater then we’d expected and frankly even greater then it was in the first quarter 2002 which was of course following 9-11. Certainly volume is an important data point and I’m going to discuss it more in detail but we shouldn’t let it obscure several other important points about our first quarter. Demand for us and seemingly for other travel companies appeared to stabilize as the quarter progressed. Leisure pricing was robust. Our ancillary revenues on a per transaction continued to exhibit strong growth. The used car market redounded dramatically and we took full advantage of it. Headcount and fleet were down significantly as we flexed our business model in the face of declining demand. Cost savings were even more substantial then we had forecast and as a result of all these factors our EBITDA was in line with our plan and well ahead of our covenant requirements even though the volume drop off resulted in a fairly significant shortfall in expected revenue. Each of these factors is worth some further discussion and through the course of the call today, Bob, David or I will provide greater color on each one. We’ll also try to give you a sense of what we’re seeing so far in the second quarter and then touch upon the recent developments with respect to Chrysler and GM. Depending on your perspective the calendar either provided an excuse for our results this quarter or a reason to cheer. I prefer the later but I’ll leave it to you to…

I’m going to start this morning by providing some context for our first quarter results. Demand for domestic travel services including car rental was extraordinarily weak in the first quarter. Year over year decline in our domestic volume was greater then it was in the fourth quarter, greater then we’d expected and frankly even greater then it was in the first quarter 2002 which was of course following 9-11. Certainly volume is an important data point and I’m going to discuss it more in detail but we shouldn’t let it obscure several other important points about our first quarter. Demand for us and seemingly for other travel companies appeared to stabilize as the quarter progressed. Leisure pricing was robust. Our ancillary revenues on a per transaction continued to exhibit strong growth. The used car market redounded dramatically and we took full advantage of it. Headcount and fleet were down significantly as we flexed our business model in the face of declining demand. Cost savings were even more substantial then we had forecast and as a result of all these factors our EBITDA was in line with our plan and well ahead of our covenant requirements even though the volume drop off resulted in a fairly significant shortfall in expected revenue. Each of these factors is worth some further discussion and through the course of the call today, Bob, David or I will provide greater color on each one. We’ll also try to give you a sense of what we’re seeing so far in the second quarter and then touch upon the recent developments with respect to Chrysler and GM. Depending on your perspective the calendar either provided an excuse for our results this quarter or a reason to cheer. I prefer the later but I’ll leave it to you to…

I’m going to focus my comments this morning on fleet. Both the steps we’ve taken to reduce fleet levels and what we’re seeing in the used car market. As Ron mentioned we continued to manage the fleet down aggressively as volumes diminish. Our average domestic fleet for the quarter was down 16% year over year in line with the decline in rental days particularly when you remember that one point of the decline in rental days was due to 2008 being a Leap Year. At the quarter end our fleet was down 22% year over year. Shifts of this magnitude are not without cost. Fleet costs which for us includes depreciation, disposal costs and any gain or loss on sale were up 13% on a per unit basis. This is down from the 22% increase reported last quarter and reflects a sequential decline in absolute per unit fleet costs of 9% from fourth quarter 2008 to first quarter 2009. The rapid decline in demand from the fourth quarter through Q1 had a negative spill over effect on per unit fleet costs and some of this will continue into Q2 as well. The real issue is that the least expensive month in a cars life is often the last month. As a result, demand weakness that causes us to sell or turn back vehicles sooner then we have planned imposes an incremental cost on us. That has impacted us in the last two quarters and will also have an effect in Q2. On the flip side, conditions at the auctions improved dramatically in the first quarter. Our conversion rate increased significantly and we are seeing the same positive trends in the used car market that the auctions have reported perhaps even magnified a bit. Following a very weak fourth quarter Manheim…

Today I’d like to discuss our recent results, our debt covenants and our financing strategy. Turning to our results, excluding unusual items in the first quarter revenue fell 17% to $1.2 billion, EBITDA was just below break even at negative $3 million and our pre-tax loss was $63 million. EBITDA declined from the $31 million we reported in first quarter 2008 due to domestic and international results that were impacted by lower volume and higher fleet costs as well as foreign exchange in the case of our international segment. Truck results were modestly better then last year. We had $7 million of unusual items in the quarter most of which was severance for the elimination of more than 2,200 employee positions in the fourth quarter and additional reductions in the first quarter. Our worldwide workforce is down more than 22% versus a year ago. In our domestic segment EBITDA declined for the quarter due to lower volume and higher fleet costs, the effects of which were partially but not fully offset by our cost savings initiatives. First quarter revenue decreased 15% reflecting an 18% decline in rental days and a 3% increase in time and mileage revenue per day. The increase in rate was, as Ron mentioned, primarily due to price increases for leisure rentals. We believe the 3% increase in T&M rates reflects the industries adjustment of fleet levels in response to weakening demand and is a testament to the car rental business model which has inventory flexibility that makes it quite different from the hospitality industry. Most of the pricing benefit was in the spot or leisure market due to contract pricing on the commercial side of the business. Ancillary revenues increased 18% on a per rental day basis reflecting the considerable progress we’ve made on sales of…

(Operator Instructions) Your first question comes from Emily Shanks – Barclays Capital Emily Shanks – Barclays Capital: I wanted to see if you guys could give me what revolver availability was at the end of the first quarter, corporate revolver availability.

At the end of the first quarter we had no borrowings under the revolver and I believe roughly $800 million of letters of credit outstanding which would give us about $350 million of capacity. We’ll get an exact number for you as well. It was $765 million of LCs outstanding which would give us availability of $385 million. Emily Shanks – Barclays Capital: I appreciate all of the details you gave us around your outlook for the back half of ’09. I just wanted to make sure I think I caught everything. In the press release you do indicate that you expect the second half of ’09 to be up year over year on the on airport rental volume if I’m reading it correctly. I want to understand what the drivers are that you think are going to be doing that.

The way to read our comments is that we expect the comparisons year over year to be stronger or better then they are in the first half of the year and then they were in the first quarter, not necessarily that they will be up year over year. Emily Shanks – Barclays Capital: In terms of the dollar amount for cost savings that you went through the different buckets, is there a portion of that that reflects the shrinking of operating model to reflect the lower demand levels, i.e. when you quote the headcount reduction of I believe it was negative 22%. Is a portion of that simply just ratcheting down the operating model?

In terms of the number that we gave for year over year headcount 5,700 positions that does include a ratcheting down for the operating model. For the most part the earlier number that I gave was 3,100 positions, that almost all is not related to the business model. It’s taking real fixed overhead out of the business. Emily Shanks – Barclays Capital: You gave the three buckets, the five point plan at $200 million, 3Q08 at $50 million and performance excellence at $100 million, what portion of that $350 million of savings for ’09 is attributable to simply your variable cost structure which is what makes car rental so attractive.

Let me see if I can answer your question a little differently. The five point plan we expect to be over $300 million I think you can assume that $200 million of that is unrelated to volume. The third quarter 2008 reductions which we said were about $50 million plus are all unrelated to volume. The process improvement initiatives at $100 million if you think back to our earlier calls we’ve probably told you those were $125 million this year. Some of those are related to volume because if you’re improving a process and there’s less volume you get less savings out of it which is why we’ve trimmed it back to $100 million. If you look at the overall total of somewhere around $300 to $350 million not very much of it relates to volume.

Your next question comes from John Healy – Northcoast Research John Healy – Northcoast Research: From a big picture standpoint, in the quarter you made an incredible amount of progress on the fleet and the pricing and it really appears the industry is doing the right things at this time. When you look at the changes taking place do you think that there are more things that you guys can do maybe from a pricing or a fleet management standpoint then you’re already doing? Maybe charging for guaranteed reservations and things along those lines. Are there additional things you see on the horizon that the industry can move towards? I’m trying to understand your confidence that the progress you guys have made in the first quarter and it looks like for the second quarter this progress is sustainable.

I think I’d put each of your items I’d qualify it all with the word potential. We’ve thought about all those things. I think it’s very hard to unilaterally implement them. They can have dramatic profit improvements but again you can’t do it all at once. On pricing as I tried to point out everybody has a historic cost structure that has been driving them towards going after more pricing. In the leisure market you can effect pricing quickly and I think that’s why you’ve seen price increases move up in leisure. It’s still pretty competitive in commercial but I think we’re optimistic just given the way price increases have been adopted during the last part of last year and the first part of this year that we can continue to realize some price. Again, you can’t do it unilaterally you can raise prices and you can hope that it sticks but eventually the industry has to go along or you got a competitive market action you’ve got to deal with. I think on fleet there’s always a possibility that you can move utilization a point or so during the course of the quarter. Certainly given that our fleet is down 22% going into the second quarter and we don’t think volume is going to be down that much we’re either going to have to add fleet or improve utilization a point or so. Meaningful amounts of utilization gains are pretty tough. If you’re thinking three, four, five points of utilization that’s pretty tough given our business mix and given the fact that we have a lot of corporate clients that want guaranteed availability of cars no matter what the day of the week is. The other opportunity that we have in fleet is our model year ’10 negotiations. Everybody’s coming to table with a pretty sobering view of the economy and a sobering view of where each party stands economically. We’re hopeful that we’re going to come to a rational conclusion that starts to narrow that gap that I talked about over the last five years where our rates went up 1% and their prices went up 40%. Those are generally the opportunities. It’s a competitive market and you can’t do anything unilaterally. John Healy – Northcoast Research: On the vehicle funding facilities, could you walk through, you may have I might have missed it, what the aggregate level of enhancement that’s required on the facilities today on a blended basis and maybe what the letters of credit outstanding were for the vehicle funding facility at quarters end.

When you combine the pieces of ABS debt we have our blended enhancement rate in the US is in the mid 30s and as a result we end up with about $500 million of letters of credit right now supporting our fleet.

Your next question comes from [Yelma Amibi] – JP Morgan [Yelma Amibi] – JP Morgan: You had $89 million of free cash flow in the quarter and it looks like it was $113 million of that was just from vehicle program cash. I understand you’re not giving forecasts but directionally how should we look at that cash going forward, vehicle program cash?

As we’ve talked about before I think pre-tax income continues to be a proxy for free cash flow in our business. Capital expenditures and depreciation tend to run over time pretty much in line with each other. We’re not a tax cash payer. We’re not seeing a significant amount of working capital uses. In fact we continue to try to find ways to squeeze cash out of working capital. As a result, pre-tax income is a good proxy for free cash flow. As a result, which you see in the first quarter is that we did take some cash from our vehicle programs as cash that was available in the first quarter as our fleet levels came down a bit. [Yelma Amibi] – JP Morgan: As you re-fleet back before the summer travel season would there be use of cash related to vehicle programs?

No, the cash we were able to take out I think we will probably be able to keep out and be able to fund the increase in in-fleet levels dollar per dollar with additional debt. I don’t see us being under pressure to put that cash back into the vehicle programs. [Yelma Amibi] – JP Morgan: About $15 to $20 million of incremental interest expense related to fleet, can you walk us through generally the assumptions behind that in terms of debt levels to get to that incremental interest expense?

I can give you the key items that are going through it. The map is more detailed. The three impacts we have are number one that fleet levels are down so the amount of borrowings we have are down. Libor is down to the extent we have some floating rate exposures and borrowings, we’re getting a benefit from Libor being lower. Those two benefits are being more than fully offset by the fact that our borrowing spreads are significantly higher this year then they were last year particularly on our asset backed conduit facility where we’re borrowing at over 300 basis points over Libor compared to being at 30 and 42.5 basis points over Libor last year.

Your last question comes from Michael Millman – Millman Research Associates Michael Millman – Millman Research Associates: I’m wondering if you could go into some more detail about the commercial market because we seem to hear how bad it is. I think you suggested it was at least on a pricing basis only down 1% but maybe you can talk about what you’re seeing in new negotiations if you’re seeing trading down and if you’re still seeing that National is being a very tough competitor in terms of new contracts, if you’re seeing any price deterioration on present contracts and anything else that might help us.

I’m not going to go into specific numbers and specific negotiations. I think some of the trends that you allude to are certainly there. Travel departments of major corporations have gotten very aggressive about bidding out business and making sure that they get as competitive price as possible. Corporate America is having the same kinds of challenges as we are in looking to reduce costs at each and every line on the income statement and that factors into it. I think of a competitive environment between the three major corporate rental car companies is as strong and healthy as it’s ever been. I will point out that in the first quarter we renewed over 99% of our relationships and we added some new account relationships. The only guidance I would add is that I think that in that environment it’s going to be a challenge to see increases in the corporate rental rate. We continue to push for them and we will hopefully get them. It’s certainly more challenging then the spot or the leisure market. Michael Millman – Millman Research Associates: Are you getting current contract rates or are they discounting against current contract rates?

Our current rates are holding. I don’t think that we’re having to give up much if any ground. I think I alluded to our last call, I think he real art of this is learning how to provide value in ways other than simply the time and mileage rate per day. We need to convince our customers of the productivity gains of taking GPS. I think we have an enormous opportunity to co-brand and co-market with a lot of our consumer products customers. Frankly I think the biggest opportunity is to reinforce the service proposition that we give the corporate customers with e-receipt and Avis Interactive Reporting and all the things that make their life easier. I think the service proposition is clearly what we have to sell. That’s how I address that. Michael Millman – Millman Research Associates: You indicated that April you were seeing as much as 18% increase at least on the leisure side in T&M. Obviously Easter bolsters that number greatly. Could you give us some indication of a normalized number?

What I said was Budget was booking gains north of 15% in April and yes you’re right clearly the Easter effect has an impact. I will say though that looking forward on Budget is achieving what I would say are impressive RPD gains. They’re certainly not on the order of north of 15% but they’re certainly above last year. Michael Millman – Millman Research Associates: Where do you expect your peak fleet to be relative to a year ago?

As we said, the fleet is going to be in line with what our projected volumes are. Right now we’re looking at about right there.

Our fleet is going to be down. We’re not going to give a summer projection on demand. We think that we’re going into the quarter down 22% and this is something that Bob and his team review on a weekly basis with the entire field operation. We’ll adjust the fleets in accordance with how our demand shapes up.

For closing remarks the call is being turned back over to Mr. Ron Nelson.

We’d like to thank you all for joining us today. We’re enthused about how well our team has been able to achieve the cost reductions that we had targeted for this year. We’re hopeful that we can get a little more volume in the second and third and fourth quarters. We think when we do we’re going to have a relatively quick and leveraged return to profitability and we hope we have a good story to tell you in three months time. Thanks for joining us.

This concludes today’s conference call. You may disconnect.