Coach America Holdings Inc., one of the largest coach operators in the country, remains bullish on the potential of the motorcoach industry despite having filed last week for a Chapter 11 reorganization.
"Despite this recession, we have grown as a company," said George Maney, CEO of Coach America. But he said that for an industry that relies heavily on transporting students and athletic teams, budget shortfalls in the public sector have proved challenging.
"The municipal and school budgets are under a lot of pressure across the country, so we've had to be more aggressive to go after market share there," Maney said. "Everyone has dealt with volatile fuel prices since the end of 2007. Overall, we're in one of the biggest downturns any of us have ever seen."
Consequently, to reduce its debt load, Coach America on Jan. 3 filed a voluntary petition for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Delaware.
In the filing, Coach America listed its estimated assets as no more than $50,000 and its estimated liabilities as between $100 million and $500 million. Maney would not divulge the company's financials.
Coach America has obtained a commitment for $30 million in financing from its existing lenders. The financing, which is subject to approval by the bankruptcy court, will be used to help ensure the continuation of normal operations, the company said.
"I'm pretty bullish on the industry," Maney said. "I think this economic downturn has highlighted the value of bus travel."
Maney pointed to "the success of some of the point-to-point carriers such as Bolt and Megabus" as examples of opportunities in the industry.
Charles de Gaspe Beaubien, president and CEO of Groupize.com, a website through which motorcoaches can be booked, said that companies like BoltBus and Megabus are having success because they are reaching younger travelers with amenities such as WiFi onboard their buses, while Coach America has struggled because its large fleet is aging.
"Coach America was not keeping up with their competitors," de Gaspe Beaubien said. "You were most of the time getting an older bus. I booked a few million dollars of buses last year, and I book zero with Coach America for that reason. They have a well-known brand, their prices are competitive, but the fleet is older."
The American Bus Association would not comment directly on Coach America, but Dan Ronan, the organization's senior director of communications, said that while Coach America is a major player in the motorcoach industry, "I don't think [its bankruptcy filing] is indicative at all of the situation of the industry overall."
"The industry is in remarkably good health," Ronan asserted.
Emphasizing the importance of amenities that keep the motorcoach industry competitive, Ronan said, "Many of the motorcoach companies in the last several years have made substantial upgrades to their fleets. Many of them have WiFi now. They've got nice lavatories. The plug-ins, all those amenities make it very comfortable."
Dallas-based Coach America has a fleet of more than 3,000 vehicles, including more than 1,600 motorcoaches, which it operates predominantly under the brand names Coach America, American Coach Lines and Gray Line.
The company said it plans to provide uninterrupted transportation services through its debt restructuring process.
Coach America said it was still honoring all tickets and reservations, including making exchanges and refunds under its normal policies; providing employee wages, health care coverage, vacation and other benefits without interruption; and paying suppliers for goods and services during the reorganization process.
Correction: Coach USA is a stand-alone independent entity that is not part of Coach America’s bankruptcy filing. A previous version of this article incorrectly implied that Coach USA was owned by Coach America.
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