Dive Brief:
- Coach USA, the owner and operator of the Megabus intercity bus line and numerous commuter bus lines in the U.S. and Canada, entered voluntary Chapter 11 bankruptcy proceedings on June 11.
- As part of a court-supervised process to sell its assets and continue operations, Coach USA agreed to sell some of its Megabus lines, along with Megabus’ retail operations and intellectual property, to an affiliate of The Renco Group, a private holding company. The sale agreement is subject to higher and better offers. Megabus operations in Atlanta, Florida, the Northeast and Texas remain to be sold.
- In a June 12 press release, Coach USA confirmed that its routes and buses are running without interruption and that customers can still book tickets through its website and apps.
Dive Insight:
The COVID-19 pandemic hit intercity bus operators hard, with overall U.S. ridership in late 2020 estimated at 45% of pre-pandemic levels, and at just 25% to 35% of those levels in the Northeast and California, according to a 2022 report from the Chaddick Institute for Metropolitan Development at DePaul University.
In a June 11 filing with the federal bankruptcy court in Delaware, the company said its ridership in 2021 was 26% of pre-pandemic levels and had only recovered to 45% by 2023. The company said driver shortages also impacted its ability to recover from the pandemic. And Coach USA is still struggling with debt incurred in a 2019 private equity buyout, with nearly $198 million in outstanding debt as of the bankruptcy filing.
While a 2024 Chaddick Institute report estimates current intercity bus ridership at around 85% to 90% of pre-pandemic levels, other factors specific to Coach USA may have come into play, said Joseph Schwieterman, the institute’s director. “Megabus is suffering from a powerful and relatively new competitor in the form of FlixBus,” he said, adding that the two bus companies compete on most routes. Schwieterman also pointed to overall weak demand in the Northeast for intercity bus lines. He called the commuter bus market, especially in the New York area, “an ailing sector.”
Coach USA operates 2,250 vehicles and has over 2,700 employees, the company said in a press release. Megabus has carried more than 50 million customers traveling to over 500 cities since its start in 2006. Collectively, the proposed sales cover 16 of the company’s 25 business segments and approximately 2,129 employees.
Coach USA created a website dedicated to the asset sale process with information for consumers, government transportation agencies, corporate customers and other stakeholders.
