Paramus-based Coach USA, one of the nation’s largest privately owned bus companies, filed for Chapter 11 bankruptcy protection this week.
Dan Rodriguez, vice president of public affairs for Coach USA, said the company has struggled to restore ridership since the COVID-19 pandemic, and that the financial difficulties are similar to those being experienced by for-profit transit companies and subsidized agencies across the country, including New Jersey Transit, which is projected to post a nearly $1 billion deficit in 2026.
“Over the past several months, we have carefully evaluated a range of strategic options and wanted to ensure we were delivering the one that would best support the communities, customers and employees who rely on us,” Rodriguez told NorthJersey.com.
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“Our number one priority is providing uninterrupted, safe and affordable transportation to our customers throughout New Jersey and beyond,” Rodriguez said.
Coach USA has roots in the bus industry that go back more than 100 years. Today, the company has 25 business units, employs approximately 2,700 people and operates approximately 2,070 buses across the United States and Canada for charter, airport shuttle and scheduled route service, including 30 private scheduled service routes in New Jersey and 35 routes under contract with NJ Transit.
One of the best known brand names is Megabus, the affordable intercity bus booking brand.
Rumors about the company’s precarious financial situation have been circulating for months, and documents filed in U.S. Bankruptcy Court for the District of Delaware show that Coach management first signed a deal in December 2023 with CR3 Partners, a lender that helps financially troubled companies.
According to court documents, total coach ridership for 2023 will be just 45% of pre-pandemic levels, well below ridership totals for area transit agencies, including NJ Transit, which has seen ridership recover by about 80%.
“Following the initial onset of the COVID-19 pandemic in the first quarter of 2020, the Company’s revenues slowly recovered, reaching approximately 58% of pre-pandemic levels in 2022,” the court filing states. “However, at the same time, operating expenses increased disproportionately due to rising fuel, insurance and labor costs and other inflationary effects on the cost base.”
How does this affect New Jersey riders?
The New Jersey Department of Transportation received Coach’s press release about the bankruptcy but said the company had not provided any information about its “intentions regarding contract services,” said agency spokesman Jim Smith.
Rodriguez said the bankruptcy process is intended to allow services to continue as uninterrupted as possible.
The routes and locations currently under contract with Coach subsidiaries are as follows:
- Community Coach operates eight routes in Bergen County: 751, 752, 753, 755, 756, 762, 772 and 780.
- ONE Bus operates three routes in Hudson County: the 2, 84 and 88.
- Suburban Transit operates 14 routes in Middlesex County: 801, 802, 803, 804, 805, 810, 811, 813, 814, 815, 817, 818, 819 and 822.
- Community Coach operates nine routes in Passaic County: 702, 705, 707, 709, 722, 744, 746, 748 and 758.
- Suburban Transit operates one route (986) in Union County.
As part of the bankruptcy proceedings, Coach proposed an asset purchase agreement with Renco Group Inc. to acquire most of its assets, including its Rockland Coach and Suburban divisions, “to continue its operations and growth and preserve the jobs of more than 1,797 union and non-union employees,” according to court documents.
Community Coach and One Bus are being auctioned off, but will be dissolved if a deal doesn’t go through. WARN notices of possible layoffs were sent to 254 One and Community employees this week, effective Sept. 8. WARN notices were also sent to 108 employees of Coach’s Elizabeth-based subsidiary, Megabus Northeast.
Rodriguez said the bankruptcy process is expected to take three to six months.
A shrinking competitive ecosystem
While private bus companies have significantly scaled back operations over the years, Coach accelerated its exit from the region’s scheduled bus service market in summer 2022 when NJ Transit took over four Hudson County routes that had been contracted to Coach on an emergency basis. Coach also ended bus service last summer on three routes in Newark, Orange and Elizabeth that NJ Transit had taken over after those communities expressed concerns about service gaps in their transit-dependent areas.
NJ Transit awarded Coach a seven-year, $50.1 million contract for the Passaic Line in 2017, beating out two other companies at the time, but this year Hoboken-based Academy Bus was the only bidder for the line.
The lack of competition was evident in the fact that the contract was awarded for $85 million over five years, a 70% increase in costs for NJ Transit in two years less service. This is the Academy’s first contract with NJ Transit since it agreed to pay $20.5 million to the state to settle long-running fraud accusations that it awarded contracts to NJ Transit to operate buses but never provided service.
Joseph Schwieterman, a DePaul University professor and director of the Chaddick Institute for Metropolitan Development, wrote in the Intercity Bus Newsletter about the news of Coach’s bankruptcy, saying he thinks it’s “one of the most notable financial developments since the industry began experiencing difficulties during the pandemic.”
He noted that Megabus is “one of only three carriers with significant operations in both the eastern United States and west of the Mississippi River,” making it “a powerful force in the industry’s competitive landscape.”
