Monday, July 15, 2024

Coach USA bus company files for bankruptcy. How will it impact NJ riders?

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Paramus-based Coach USA — one of the largest private bus companies in the country — filed to begin Chapter 11 bankruptcy proceedings this week.

Dan Rodriguez, vice president of public affairs for Coach USA, said the company has struggled to regain ridership since the COVID-19 pandemic, not unlike the fiscal challenges being experienced around the country by for-profit transportation companies and subsidized agencies, including NJ Transit, which is expected to have a nearly $1 billion deficit in 2026.

“For the last several months, we’ve been carefully evaluating a broadband of strategic options and what we wanted to ensure was what would best support our communities, our customers and our employees who depend on us,” Rodriguez told NorthJersey.com.

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“Our number one priority continues to be to provide our customers with uninterrupted safe and affordable transportation here in New Jersey and beyond,” Rodriguez said.

Coach USA has roots in the bus industry that are over 100 years old. Today, it has 25 business segments, employs about 2,700 people and operates about 2,070 buses across the U.S. and Canada for its charter, airport shuttles and scheduled route services, including 30 private scheduled service routes in New Jersey and 35 routes in contract with NJ Transit.

Among its most known brand names is the affordable intercity bus-booking brand, Megabus.

Rumors of the company’s unstable financial status have been floating for months, and documents filed in U.S. Bankruptcy Court for the District of Delaware indicate Coach’s leadership first retained CR3 Partners, a firm that aides companies in financial distress, in December 2023.

In 2023, Coach’s total ridership was only 45% of what it was before the pandemic, according to court documents. This is well below that of the region’s transit agencies, including NJ Transit, which has recovered about 80% of ridership.

“After the initial onset of the COVID-19 pandemic in the first quarter of 2020, the company’s revenues slowly rebounded, with revenues reaching nearly 58% of pre-pandemic levels in 2022,” according to documents filed in court. “At the same time, however, operating expenses increased disproportionately, largely due to rising fuel, insurance, labor costs and other inflationary impacts on the cost base.”

How does this impact New Jersey riders?

NJ Transit said they received the press release about Coach’s bankruptcy, but said the company has not provided information about “their intentions regarding contracted services,” said Jim Smith, an agency spokesman.

Rodriguez said these bankruptcy proceedings are designed to continue service uninterrupted to the extent possible.

Here are the routes Coach’s subsidiaries are currently contracted to operate and where:

  • Community Coach operates eight routes in Bergen County: 751, 752, 753, 755, 756, 762, 772 and 780.
  • ONE Bus operates three routes in Hudson County: 2, 84 and 88.
  • Suburban Transit operates 14 routes in Middlesex County: 801, 802, 803, 804, 805, 810, 811, 813, 814, 815, 817, 818, 819 and 822.
  • Community Coach operates nine routes in Passaic County: 702, 705, 707, 709, 722, 744, 746, 748 and 758.
  • Suburban Transit operates one route in Union County: 986.

As part of its bankruptcy proceedings, Coach proposed an asset purchase agreement with The Renco Group, Inc. to buy the bulk of its assets, including Rockland Coaches and Suburban business segments, to “continue operations and growth and preserve over 1,797 union and non-union jobs,” according to court documents.

Community Coach and ONE Bus will be auctioned, but if a transaction doesn’t take place, they will be dissolved. WARN notices about possible layoffs were sent to 254 employees at ONE and Community this week that go into effect Sept. 8. Another 108 employees with Coach’s Elizabeth-based Megabus Northeast subsidiary were also provided WARN notices.

Rodriguez said the bankruptcy proceedings are expected to take three to six months.

A shrinking competitive ecosystem

Though private bus companies have downsized operations considerably over the years, Coach ramped up its exit from the region’s scheduled bus service market in summer 2022 when NJ Transit took over four Hudson County routes that had been contracted out to Coach on an emergency basis. Coach also terminated service on three bus routes in Newark, the Oranges and Elizabeth last summer, which NJ Transit took over after those communities voiced concern about voids of service in transit-dependent areas.

NJ Transit awarded Coach the seven-year, $50.1 million contract for the Passaic routes in 2017, beating out two other competitor companies at that time. This year, however, Hoboken-based Academy Bus was the lone bidder for those routes.

The lack of competition showed as the contract award was for $85 million over five years, a 70% increase in cost for NJ Transit for two fewer years of service. This is Academy’s first contract with NJ Transit after agreeing to pay the state $20.5 million to settle allegations that it committed a lengthy fraud of invoicing NJ Transit for bus trips it was contracted to provide but never serviced.

Joseph Schwieterman, a professor at DePaul University and director of the Chaddick Institute for Metropolitan Development, wrote in his intercity bus newsletter about Coach’s bankruptcy news, saying he considers this “one of the most notable financial developments since the industry began experiencing hardship during the pandemic.”

He noted Megabus is “one of just three carriers that has sizeable operations in both the Eastern U.S. and points west of the Mississippi River” and is “a major force in the industry’s competitive landscape.”

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