v3.25.2
Financial Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments Financial Instruments
Derivative Instruments and Hedging Activities

Currency Risk. We use currency exchange contracts to manage our exposure to changes in currency exchange rates associated with certain of our non-U.S.-dollar denominated receivables and forecasted royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S. dollar denominated acquisitions. We primarily hedge a portion of our current-year currency exposure to the Australian, Canadian and New Zealand dollars, the euro and the British pound sterling. The majority of forward contracts do not qualify for hedge accounting treatment. The fluctuations in the value of these forward contracts do, however, largely offset the impact of changes in the value of the underlying risk they economically hedge. We have designated our euro-denominated notes as a hedge of our investment in euro-denominated foreign operations.

The estimated net amount of existing gains or losses we expect to reclassify from accumulated other comprehensive income (loss) to earnings for cash flow and net investment hedges over the next 12 months is not material.

Interest Rate Risk. We use various hedging strategies including interest rate swaps and interest rate caps to create what we deem an appropriate mix of fixed and floating rate assets and liabilities. We use interest rate swaps and interest rate caps to manage the risk related to our floating rate corporate debt and our floating rate vehicle-backed debt. We record the changes in the fair value of our cash flow hedges to other comprehensive income (loss), net of tax, and subsequently reclassify these amounts into earnings in the period during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. We record the gains or losses related to freestanding derivatives, which are not designated as a hedge for accounting purposes, currently in earnings and are presented in the same line of the income statement expected for the hedged item. We estimate that approximately $17 million of gain currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months.
Commodity Risk. We periodically enter into derivative commodity contracts to manage our exposure to changes in the price of fuel. These instruments were designated as freestanding derivatives and the changes in fair value are recorded in earnings and are presented in the same line of the income statement expected for the hedged item.

We held derivative instruments with absolute notional values as follows:
As of 
June 30, 2025
Foreign exchange contracts$1,746 
Interest rate caps (a)
9,828 
Interest rate swaps750 
__________
(a)Represents $6.3 billion of interest rate caps sold and approximately $3.5 billion of interest rate caps purchased. These amounts exclude $3.1 billion of interest rate caps purchased by our Avis Budget Rental Car Funding subsidiary as it is not consolidated by us.

Estimated fair values (Level 2) of derivative instruments are as follows: 
As of June 30, 2025As of December 31, 2024
Fair Value,
Asset Derivatives		Fair Value,
Liability
Derivatives		Fair Value,
Asset Derivatives		Fair Value,
Liability
Derivatives
Derivatives designated as hedging instruments
Interest rate swaps (a)
$26 $— $41 $— 
Derivatives not designated as hedging instruments
Foreign exchange contracts (b)
20 6 5 10 
Interest rate caps (c)
1 1 3 12 
Total$47 $7 $49 $22 

__________
Amounts in this table exclude derivatives issued by Avis Budget Rental Car Funding, as it is not consolidated by us; however, certain amounts related to the derivatives held by Avis Budget Rental Car Funding are included within accumulated other comprehensive income (loss), as discussed in Note 13 – Stockholders' Equity.
(a)Included within other non-current assets or other non-current liabilities.
(b)Included within other current assets or other current liabilities.
(c)Included within assets under vehicle programs or liabilities under vehicle programs.
The effects of financial instruments recognized in our Condensed Consolidated Financial Statements are as follows:

Three Months Ended 
June 30,		Six Months Ended 
June 30,
2025202420252024
Financial instruments designated as hedging instruments (a)
Interest rate swaps (b)
$(5)$(3)$(11)$4 
Euro-denominated notes (c)
(87)8 (128)23 
Financial instruments not designated as hedging instruments (d)
Foreign exchange contracts (e)
29 (6)26 (19)
Total$(63)$(1)$(113)$8 
__________
(a)Recognized, net of tax, as a component of accumulated other comprehensive income (loss) within stockholders’ equity.
(b)Classified as a net unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss). Refer to Note 13 – Stockholders' Equity for amounts reclassified from accumulated other comprehensive income (loss) into earnings.
(c)Classified as a net investment hedge within currency translation adjustment in accumulated other comprehensive income (loss).
(d)Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged.
(e)Primarily included within interest expense.

Debt Instruments

The carrying amounts and estimated fair values (Level 2) of debt instruments are as follows: 

As of June 30, 2025As of December 31, 2024
Carrying
Amount		Estimated
Fair Value		Carrying
Amount		Estimated
Fair Value
Corporate debt
Short-term debt and current portion of long-term debt$39 $39 $20 $20 
Long-term debt6,038 6,168 5,373 5,452 
Debt under vehicle programs
Vehicle-backed debt due to Avis Budget Rental Car Funding$15,527 $15,709 $14,083 $14,154 
Vehicle-backed debt4,386 4,414 3,441 3,469 
Interest rate swaps and interest rate caps (a)
1 1 12 12 
__________
(a)Derivatives in a liability position.