Tague is being vexed by some of the same problems as his predecessor, such as rising costs, changes in what travelers want to drive, and lower used-car values.
He blamed rising depreciation costs and declining revenue for the third-quarter miss and told investors that 2016 earnings will be no more than a fifth of what it projected in August.
"I underestimated the depth and the breadth and the complexity of the transformation we are now undertaking at this company," Tague told analysts on a conference call. "We are behind schedule and we are challenged earlier than we thought."
Hertz shares fell $8.04 to $27.70 on Tuesday and in early trading Wednesday had slipped an additional 2.5 percent to $27.01. After the market closed yesterday, Icahn said in a filing that he boosted his stake to 33.77 percent from about 15.6 percent. He's also one of the biggest holders of Herc Holdings Inc., the equipment rental company that separated in June.
If Icahn's latest investment is a show of faith, it isn't universally shared.
"The problem is management," said Maryann Keller, an independent consultant in Stamford, Connecticut, who sat on Dollar Thrifty Automotive Group Inc.'s board when it sold to Hertz in 2013. "The company was dysfunctional under previous management. It chose a CEO who has no experience in the rental industry. They were bound to stumble."
Stumbling might be an understatement. Estero, Florida-based Hertz reduced its full-year earnings outlook to a range of 51 cents to 88 cents a share, after saying in August that it expected $2.75 to $3.50.
"This management is in the midst of a transformation of the company," Hertz spokesman Bill Masterson said. "The issues around vehicle values and pricing are industry issues" and are the same as those encountered two years ago, he said.
Bondholders are just as dismayed, with some questioning Hertz's decision to go forward with bond sales in September without adjusting its forecasts. Investors who were reassured by earlier estimates clamored for the notes, allowing Hertz to boost the U.S. deal to $800 million from a planned $500 million and get lower yields on both that sale and one for euro bonds.
After Hertz delivered the bad news, the dollar notes dropped 6.5 cents to 90 cents on Tuesday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Investors "cannot help but ask why such a 'plagues of Egypt' backdrop would not have merited a guidance adjustment at the time of the bond deals," Glenn Reynolds and Nathan Wenger of CreditSights wrote in a note on Tuesday. "At best, low style points for deal timing and disclosure."
Analysts on the conference call hammered management on Hertz's ratio of debt to Ebitda, which is close to levels that would violate a loan covenant, the first step to triggering a default. Hertz's debt-to-equity ratio in the third-quarter was 4.5 times under the covenant's definition, while the maximum permitted was 5.25. Hertz has little room for error going forward. It must stay below 4.75 times in the fourth quarter and first quarter of 2017, according to loan documents. Executives said they expect to comply with the restrictions.
"There's a lot that happened here in a short amount of time when they were out in September affirming everything," said Chris Langs, a taxable bond portfolio manager at GW&K Investment Management, which oversees $33 billion. "Management certainly gives us pause."
Many of today's issues sound familiar to Hertz shareholders. Before he stepped down, Tague predecessor Mark Frissora also cited higher-than-expected operating expenses in its U.S. rental business, as well as lower resale values and costs from fleet maintenance, damage and depreciation. Frissora is now CEO of casino operator Caesars Entertainment Corp.