Coach USA, the operator of Megabus and other commuter bus lines in the US and Canada, filed for bankruptcy protection in Delaware due to the financial strain caused by the COVID-19 pandemic. The company was acquired by private equity firm Variant Equity Advisors in a $270 million deal that heavily relied on debt. The pandemic led to a 90% decline in bus ridership in 2020, and while levels have somewhat recovered, they are still only at 45% of pre-pandemic levels in 2023. This, combined with increased costs and higher interest rates, made it difficult for Coach to service its debt.
Coach CEO Derrick Waters stated that buses will continue to run as normal during the bankruptcy proceedings, with the company’s focus on providing safe transportation for its passengers and working closely with contract customers and transportation partners. Coach entered Chapter 11 with $197.8 million in debt, including $37 million due on a pandemic relief loan under the CARES Act, as well as other unpaid obligations totaling at least $134 million. The company employs 2,700 people and operates 2,070 buses in 27 locations in the US and Canada.
In an effort to restructure and alleviate debt, Coach has three sale agreements in place that are subject to higher and better offers. These agreements cover 16 of Coach’s 25 business lines and would preserve jobs for approximately 2,100 employees. Renco Group, a private investment company, is set to acquire the majority of Coach’s assets in exchange for taking on $130 million of the company’s debt and certain union contracts. Avalon Transportation would purchase bus lines in Atlanta and Western states, as well as specialized tour bus divisions, for $14.8 million. Additionally, ABC Buses would buy a fleet of 143 double-decker buses for $2.3 million.
The bankruptcy filing comes as Coach USA continues to navigate challenges stemming from the pandemic, including reduced ridership, increased costs, and higher interest rates. Despite these financial difficulties, the company remains committed to providing reliable transportation services to its passengers and maintaining partnerships with contract customers and transportation agencies. By seeking to sell its assets and restructure its debt, Coach aims to emerge from bankruptcy in a stronger financial position that will allow for continued operations and job preservation for its employees.
The financial strain faced by Coach USA was largely attributed to the private equity buyout in 2019, which left the company burdened with significant debt. The impact of the COVID-19 pandemic only exacerbated these financial challenges, resulting in a drastic decline in bus ridership and increased costs for essential needs such as employee retention and fuel. Despite the setbacks, Coach CEO Derrick Waters emphasized the company’s commitment to ensuring the uninterrupted operation of its bus services and prioritizing the safety and satisfaction of its passengers. As Coach proceeds through the bankruptcy process and pursues asset sales, it seeks to secure a stable financial future that supports its continued presence in the commuter bus industry.
