Bus company Coach USA, owner of the Megabus brand and commuter bus lines New York and New Jersey, filed for bankruptcy, saying it was unable to recover from a decline in ridership brought on by the pandemic.
The company owes creditors between $100 and $500 million, according to its Chapter 11 petition filed Tuesday in Wilmington, Delaware. Chapter 11 of the U.S. Bankruptcy Code is designed to allow companies to keep operating while they shed debt and reorganize.
Coach USA operates a number of commuter services in the New York City area, including Rockland Coaches, Short Line, Suburban Transit and Community Coach.
Private equity firm Variant Equity Advisors purchased Coach USA from British bus company Stagecoach Group in April 2019, less than a year before Coach USA’s business was decimated by the pandemic. Commuter ridership declined 90% in 2020, according to court papers, and the company turned to Covid relief funding to help stay afloat.
Ridership has partially recovered, but last year was only about 45% of prepandemic levels. Meanwhile, the company was contending with higher expenses due to rising fuel, insurance and labor costs. Its management began to explore a possible sale late last year.
Across the U.S., the transportation industry has had to contend with low ridership levels on trains and buses as many Americans now work from home or only commute into the office a few times a week. In 2019, there were about 3,000 bus companies, according to Peter Pantuso, the chief executive officer of the American Bus Association. Since then, about half have closed, many of those remaining are operating at about 70% capacity, he said.
“We lost almost two full years of revenue over a three-year period,” Pantuso said in an interview. “You just don’t have enough bandwidth to make up that lost revenue period, because the bills didn’t go away.”
Just last year, popular New Jersey-based operator DeCamp Bus Lines ceased its New York City commuter service due to low ridership.
Many transit services rely heavily on fares, operators have had to seek out other sources of funding as that revenue dwindled. Unless the government steps in or new sources of money are found, many operators may be left with two choices: cut services or raise fares. Neither option will help to win back riders.
Coach USA said in a statement that the filing is intended to sell certain bus lines to an affiliate of Renco Group, as well as its Megabus intellectual property and retail operations. Avalon Transportation has also agreed to buy some Coach assets, the company said.
Both buyers have agreed to act as initial bidders at a court-supervised auction, the company said. The auction process and the initial bids must first be approved by the judge overseeing the bankruptcy.
To help pay for the restructuring case and to keep operating during bankruptcy, the company has arranged to borrow as much as $20 million.
Coach offers bus services in 27 locations in the U.S. and Canada and carries more than 38 million passengers every year, according to its website. Its Megabus service has carried more than 50 million people through more than 280 cities since it was started in 2006. The company employs about 2,700 people.
Steven Church and Skylar Woodhouse, Bloomberg , 2024-06-17 21:11:42
Source link