America’s largest private bus company officially files for BANKRUPTCY
06/20/2024 / By Laura Harris
Coach USA, the operator of Megabus and two dozen other commuter bus lines in the United States and Canada, has officially filed for bankruptcy protection.
According to the documents filed in bankruptcy court in Wilmington, Delaware on June 18, Coach USA, the largest privately owned bus company in the U.S., filed for Chapter 11 bankruptcy protection due to the slow recovery in ridership since the Wuhan coronavirus (COVID-19) pandemic in 2020. Coach USA also revealed in the court filings that its ridership plummeted by 90 percent in 2020 due to pandemic lockdowns, and despite efforts to bounce back, ridership levels in 2023 only saw 45 percent of pre-pandemic levels in 2023.
Moreover, rising fuel, insurance and labor costs, compounded by inflation, have further strained their finances.
Coach USA enters Chapter 11 with $197.8 million in debt. This includes $37 million due on a pandemic relief loan under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, along with at least $134 million in other unpaid obligations, including trade debts.
In line with the slow recovery, Coach USA, purchased by private equity firm Variant Equity Advisors for $270 million in 2019, has entered into three separate sale agreements subject to better offers during the court process.
First, Coach USA agreed to sell the majority of its assets to the Renco Group, a private investment company, in exchange for taking on $130 million of its debt and certain union contracts, along with its Megabus intellectual property and retail operations. Second, Avalon Transportation is set to purchase bus lines in Atlanta, Georgia, and Western states, as well as specialized tour bus divisions for $14.8 million. Additionally, ABC Buses intends to buy a fleet of 143 double-decker buses for $2.3 million. (Related: Casual dining chain Red Lobster officially files for BANKRUPTCY.)
These agreements seek to sell its assets and reduce its debt from the 2019 private equity buyout that proved ill-timed. At the same time, the agreements seek to cover 16 of its 25 business lines and preserve jobs for about 2,100 employees.
Fortunately, Coach USA, which operates in 27 locations and employs approximately 2,700 people, will continue its bus operations while undergoing a court-supervised sale of its assets as part of the bankruptcy proceedings.
“Our top priority remains safely carrying the millions of passengers who choose our buses each year and working closely with our valued contract customers and transportation agency partners,” said Coach USA CEO Derrick Waters.
COVID-19 pandemic badly affected the transportation industry across America
The impact of the COVID-19 pandemic on the transportation industry across the United States has been profound, with reduced ridership on trains and buses, as many Americans now work from home or commute to the office only a few times a week.
In 2019, there were about 3,000 bus companies, but since the onset of the COVID-19 pandemic, approximately half have closed and many of the remaining companies are operating at about 70 percent capacity. Additionally, private bus companies had only returned to 40 percent of pre-pandemic ridership by the end of 2022.
“We lost almost two full years of revenue over a three-year period,” Peter Pantuso, the chief executive officer of the American Bus Association 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.”
In 2023, the popular New Jersey-based DeCamp Bus Lines discontinued its New York City commuter service due to low ridership. Many transit services, which rely heavily on fares, have had to seek alternative funding sources as fare revenue has declined. Without government intervention or new funding sources, many operators may face two difficult choices: cutting services or raising fares. But then, neither option is likely to attract riders back.
With the recent filing of Coach USA, the future of Megabus is now in jeopardy. Megabus serves 500 cities across America with a total of over 50 million population since its launch in 2006.
Learn more about the fragile state of the American economy at EconomicRiot.com.
Watch this clip from the “Worldview Report” discussing how bankruptcies in corporate America are once again on the rise after a two-year lull.
This video is from the Worldview Report channel on Brighteon.com.
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