Coach USA, a well-known bus company operating Megabus and other commuter bus lines in the U.S. and Canada, has recently filed for bankruptcy protection in Delaware. The company made this decision in order to sell its assets and alleviate the debt it acquired during a private equity buyout in 2019.
The private equity firm Variant Equity Advisors purchased Coach for $270 million, primarily using debt that Coach is still struggling to pay off. The COVID-19 pandemic significantly impacted Coach’s business, causing a 90% decline in bus ridership from 2019 to 2020. Although ridership has somewhat recovered since then, it still remains at only 45% of pre-pandemic levels in 2023.
Due to these challenges, Coach has faced difficulties in servicing its debt, as well as dealing with higher interest rates and increased costs for essential needs such as employee retention and fuel. Despite the bankruptcy filing, Coach CEO Derrick Waters assured the public that buses will continue to operate as usual during this process.
Coach entered Chapter 11 bankruptcy with a total debt of $197.8 million, including obligations such as a $37 million pandemic relief loan under the CARES Act. The company operates in 27 locations across the U.S. and Canada, employing 2,700 individuals and utilizing 2,070 buses under various brand names like Megabus, Dillon’s Bus Company, and Go Van Galder.
In an effort to restructure and recover, Coach has secured three sale agreements, subject to potential higher offers. These agreements encompass 16 of Coach’s 25 business lines and aim to safeguard jobs for approximately 2,100 employees. Renco Group, a private investment company, is set to acquire the majority of Coach’s assets by taking on $130 million of the company’s debt and certain union contracts.
Additionally, Avalon Transportation will purchase bus lines in Atlanta, Georgia, and Western states, along with specialized tour bus divisions, for $14.8 million. ABC Buses has also agreed to buy a fleet of 143 double-decker buses for $2.3 million as part of the restructuring plan.
Despite the challenges faced by Coach USA, the company remains committed to prioritizing passenger safety and maintaining its operations throughout the bankruptcy proceedings. With strategic sales and restructuring efforts in place, Coach aims to emerge from this process stronger and more resilient in the long run.