Resurgent Greyhound Shifting Into High Gear
Less than two years ago, Greyhound Lines Inc., the country’s only nationwide intercity bus company, was bankrupt and hurting for passengers. Today, it’s rolling merrily along.
“The turnaround is completed. We’ll be profitable this year. What we’re now beginning is the new era of growth for Greyhound,” said Craig Lentzsch, who became president and chief executive of the line of 2,100 buses in 1994.
The Dallas-based bus business has wooed back passengers through coordinated service with regional lines and new ticket price options.
“We think if you have more places for customers to go, you get more customers,” Lentzsch said.
It’s been a long and winding road for Greyhound.
Intercity bus ridership fell steeply in the 1960s as air travel grew more popular. The company was sold by Dial Corp. in 1987 and ultimately filed for bankruptcy protection. It emerged in 1991, but due to dwindling passenger traffic, heavy debt and mounting losses, Greyhound continued to struggle with creditors until 1994, when it opted to control the damage by cutting back on some operations.
The company is now emerging strong and, Lentzsch believes, ready for expansion.
“All the numbers have been looking better,” said Christopher Kane, an analyst with Salomon Brothers. “Now, the challenge will be going forward.”
The company has made numerous expansion moves already this year, most recently buying a North Carolina bus line for $20.3 million in cash and stock.
Carolina Trailways Inc. will join Vermont Transit and Texas, New Mexico & Oklahoma Coaches as a wholly owned subsidiary.
Also this year, Greyhound, which has annual revenue of more than $700 million, opened a new bus terminal in Chattanooga, Tenn., and financed 109 new buses.
In addition, the company announced joint operations with several bus companies to improve operating efficiencies and increase the available routes.
“If the pie is bigger it’s easier to split up the pie. We don’t see any reason to fight the other bus companies for customers,” Lentzch said.
Some of the agreements include: Peter Pan Bus Lines Inc. to reach the New York to Philadelphia routes; Capital Motor Lines and Colonial Trailways to reach more cities in Alabama, Mississippi, Florida and Georgia; and SITA Inc., to offer service from Los Angeles into the interior of Mexico in Greyhound’s first move past the border cities.
Passengers are responding. Greyhound’s ticket sales increased 14.5% in January and 10.5% in February over the same months in 1996.
“We think we’re off to the best start for a calendar year since 1989,” Lentzsch said.
Still, not all is rosy. Yield per passenger mile declined in January by 2.7% under the same month last year to 8.97 cents, then fell 3.4% in February to 8.87 cents. The drop reflects the advance-purchase discount fares--similar to the those offered by airlines--that Greyhound is now offering.
An example is a bus trip from New York to Los Angeles. Currently that would cost a walk-up customer $129. If the ticket was bought 21 days in advance, it would cost $59.
“If you checked that price in 1994 it was $269. Big difference, especially for our customer,” said Lentzsch.
Company demographics describe the typical bus passenger as very young or elderly, a budget traveler who is not worried about time.
Rosy Garza, 18, fits the profile. She, her toddler and her 16-year-old sister traveled from Carrizo Springs, Texas, to Illinois. During their 36-hour journey, they went from Carrizo Springs to San Antonio, then to Dallas, then Chicago, and finally to Moline.
“Money is the primary reason we’re riding the bus. The airplane is probably too expensive,” she said during the stop in Dallas.
