Riding a Turnaround

Greyhound Lines Inc. is sometimes called “The Big Dog,” but the moniker hasn’t always denoted the bus company’s logo. It also would have neatly described Greyhound’s dismal performance during much of the 1990s.

But that’s slowly changing. The only nationwide provider of intercity, scheduled bus service, Dallas-based Greyhound is turning the corner, and its rebound is expected to continue into 1999, at least.

It’s a stark change for the long-suffering company, which endured a bankruptcy, fought with its unions, posted massive losses and alienated untold passengers with dirty buses, demoralized employees and lousy on-time performance.

Credit for the rebound mainly goes to a management team, led by chief executive Craig Lentzsch, that took Greyhound’s helm nearly four years ago. Today, the line has better customer service, improved labor relations--it reached a new union contract with its 4,500 drivers last month--a newer bus fleet and increasing revenue and passenger traffic.

Also helping is the rise in airline fares, which have driven more people back to the buses, analysts said. In this year’s second quarter, Greyhound said ticket sales rose 11% from a year earlier, and the number of passengers taking trips of 1,000 miles or more--the market where it competes directly with discount airlines--jumped 17%.

Greyhound in recent years has also been acquiring smaller bus lines that serve primarily Latino travelers, so as to bolster its share of the market for passengers traveling between Southern California, Texas, Mexico and other Southwest locales.

The company, which traces its roots to 1914 when Swedish immigrant Carl Wickman began transporting miners between towns in Minnesota, currently serves 2,600 cities with 18,000 daily departures.

Greyhound is even making a few bucks again. In the three months ended June 30, it earned $659,000, and it’s expected to earn roughly $18 million to $20 million for all of this year, which would be its first annual profit since 1993. (Last year it lost $21 million on revenue of $771 million.)

Greyhound’s stock, which stood at $2.50 a share in early 1995, had jumped to $6 this spring before settling back to $4.63 a share, down 31 cents, Thursday on the American Stock Exchange.

But make no mistake: Greyhound’s rebound won’t shatter records. “Greyhound’s outlook remains positive,” but “we do not believe there is any potential for significant growth,” analyst Raymond Neidl of the investment firm ING Barings writes in a new report.

There “is a basic need for this service,” especially for lower-income passengers and those riders that find train service too limited, but bus service isn’t a growth industry, Neidl said.

That’s one reason he’s among only a handful of analysts who bother following Greyhound. And without a wide following on Wall Street, the company and its stock will keep struggling to get investors’ attention.

Losing Altitude

Speaking of investors, it’s been a summer to forget for stockholders of Northwest Airlines. Shares of the nation’s fourth-largest carrier first began stalling as the economic woes in Asia--one of Northwest’s key markets--took a greater toll on the airline. Now, the stock is still getting hammered as Northwest’s labor situation goes from bad to worse.

After reaching $63 a share in mid-March, Northwest’s stock has suffered a breathtaking plunge of 52%, erasing more than $3 billion from the value of its investors’ holdings. On Thursday, the stock closed at $30.25 a share, down $1.66, on Nasdaq.

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James F. Peltz can be reached via e-mail at james.peltz@latimes.com.