Greyhound Buying Only National Competitor for $80 Million
DALLAS (AP) _ Greyhound Lines Inc. maintains its plan to buy rival Trailways Corp. won’t squelch competition, but analysts say they don’t know what would happen with just one national intercity bus company.
Greyhound Chairman Fred Currey said the $80 million proposed acquisition won’t stop competition because the company still has to vie with discount airfares and automobiles.
″We had two choices. To sit back and wait for Trailways to go bankrupt or to step in and save as many jobs and as much service as possible,″ Currey said Friday at a news conference in Washington.
Officials said service will be maintained for at least one year to all communities now on either company’s system that have no other bus service. Where Trailways and Greyhound routes overlap, the company plans to reschedule routes to make service more efficient.
The merger isn’t expected to affect fares, said Vice Chairman Craig R. Lentzsch, who held a simultaneous news conference in Dallas, where Greyhound and Trailways are based.
Currey said Greyhound plans to withdraw all of Trailways’ pending applications for abandonment of service and plans to begin van service to many small communities that have lost bus service.
In recent years, Greyhound has cut the number of communities it served from 14,000 to 12,000 and Trailways has abandoned all or some service in 10 states.
Analysts said they didn’t know what prompted Greyhound’s move.
″I’m sure they’re not doing it for a salvation to humanity type of thing,″ said Katherine M. Stults of Dean Witter Reynolds Inc. in New York.
Currey, who headed Trailways from 1975-79, predicted quick approval of the deal by the Interstate Commerce Commission despite possible competitive concerns.
The proposed acquisition won’t result in a monopoly because of the air and automobile competition, said Lentzsch.
″Additionally, the industry is deregulated with respect to entry and exit and so if there were any attempts to utilize any form of monopolistic behavior, other carriers would instantly jump into the marketplace,″ he said.
″It’s not a monopoly in the sense that there are an awful lot of regional companies,″ Ms. Stults said.
Analysts said the outlook for the intercity bus business continues to be poor. Bus ridership has declined by 48 percent since 1980.
″It’s hard to see how anyone can arrest the decline. Depending on how the airlines continue to price their product, the bus lines are for the very young and very old,″ said transportation analyst Dudley Heer of Duff & Phelps in Chicago.
Lentzsch said Trailways representatives approached Greyhound after a Dallas investment group headed by Currey purchased Greyhound Lines Inc., from its Phoenix-based parent, Greyhound Corp., for $350 million.
Trailways officials would not comment Friday.
Greyhound, the country’s largest bus company, operates in the 48 contiguous states. Trailways serves 38 states, with its greatest concentration across the South. In 17 states Trailways provides the only bus service to some communities.
Under the agreement, Greyhound will pay $80 million for 450 of Trailways’ 1,200 buses, some of its terminals and garages and undisclosed other assets, according to Currey. Some of the remaining Trailways buses will be operated under leasing agreements.
The deal also includes purchase of three Trailways subsidiaries: Eagle International Inc., a bus manufacturing company in Brownsville, Texas; Trailways Food Service Inc., which operates restaurants in its terminals; and Trailways Commuter Transit Inc., which operates more than 300 commuter and transit buses in Texas.
The purchase does not affect dozens of local or regional bus companies that have used the Trailways name but are not part of the Dallas-based corporation.
There may be some layoffs as a result of the merger, Currey said. Greyhound has about 8,500 employees and Trailways 4,000.
Lentzsch said Greyhound plans to continued to operate Trailways buses under the Trailways name because of its widespread recognition.
According to Greyhound, Trailways lost nearly $23 million during the last two years. Currey said Greyhound is profitable.