One Scared Puppy

Why Dallas' Greyhound Lines is fighting for its life

"It's not a perfect system, but it works 99 percent of the time," says Picknelly, who inherited the Peter Pan bus company from his father and is passing it on to his son. "By experience, we know what business we did last Friday or the Friday before or a year ago on a holiday. We know when one bus will be enough."

But at Greyhound, nothing was to remain that simple. Experts were hired. Phrases like "yield management" were bandied about. Greyhound was going to be state of the art, using computers to map every eddy and current in its ridership and dispatching buses based on instantly available tracking data.

The heart of the system was to be computerized reservations. Greyhound would no longer need to be in the Russell Guide or depend on local carriers for unpredictable passenger traffic. Like airlines, it would use central reservations to track and control its fleet and squeeze the most from its system.

When that vision confronted reality, however, vision crashed and burned.

Whether advance reservations even have a place in the bus industry is a matter of some disagreement in industry circles.

Old-timers, like Peter Picknelly, Sr., scoff at the idea. "People who ride inter-city buses pick up the phone, ask what time the next bus leaves, and then come down and hop on the bus," he says. "People generally don't make reservations days or weeks in advance. It's not like they're going to Hawaii."

Still, younger observers venture, the bus industry must make peace with the new ways of the world. If buses are going to make money, they say, bus lines must hook up smoothly with airlines and trains, and computerized reservations can speed that process.

"Down the road, computerized reservations could be a big asset," Connor says. "It could turn Greyhound into a reservation system for many different modes of transportation, if it were properly used."

Clearly, Greyhound's fancy new reservation system was not properly used. In fact, when it was introduced last summer, it was such a failure that the fallout almost threw the company right back into bankruptcy.

Company officials publicly acknowledge that Greyhound horribly bungled the rollout of its computerized system. There were not enough telephone operators to take calls for reservations. Many of the terminal workers were not adequately trained on the new system.

The time it took to issue tickets at the counter actually went up in many instances, and frustrated customers found that--with a computer involved--it was getting harder to get on a Greyhound bus.

Peter Picknelly, Sr. watched last summer as the opening days of the new computer age dawned at the New York Port Authority bus terminal, the busiest in the country.

"It takes an hour and a half to go from New York to Philadelphia, if traffic's not bad," he says. "They had people standing in line that long trying to get tickets. It was an absolute disaster."

To Picknelly's delight, many of those customers walked over and bought Peter Pan tickets instead. Absent a computer, buying Peter Pan tickets was easy. "We picked up a lot of traffic off of that," Picknelly says.

Similar scenes played out across the Greyhound system. It was a disaster, and it ripped the lid off Greyhound's promises to investors and Wall Street that the company would ride computer technology to record profits.

After watching the computer fiasco, Chriss Street had had enough. Street's company is a sort of bankruptcy bargain hunter from California. He shops around for pieces of distressed companies that appear to have a strong future and buys in cheap. Street is one of Greyhound's most vocal bondholders. When the computer meltdown occurred, he was not pleased.

"The phone lines were absolutely jammed," he says. "They didn't hire enough operators to answer the phones. On a good day, if you called back five or six times, only 70 percent of those calls got answered. On a busy day, only 40 percent. This is how incompetent they were."

The computer debacle caused Greyhound's stock prices to collapse. In September 1994, when the company announced that its ridership had fallen 12 percent despite the fancy new computer systems, share prices fell by almost one-fourth in a day.

Stock that had sold for over $22 a share in the summer of 1993--when the computer system was still a glowing promise--fell to less than $3 a share by the winter of 1994. Street and other bondholders petitioned the bankruptcy court, seeking to force the company back into Chapter 11.

Ultimately, the bondholders accepted newly issued company stock in exchange for their bonds, and agreed to let new managers take another shot at salvaging the company.

Lentzsch was brought in to replace Schmieder, and his first task was a mad scramble for cash to keep the company operating. So far, Lentzsch has been successful in keeping the company afloat and raising new capital.

Now, insiders and investors say, the question is whether he can repair the damage Greyhound inflicted on itself when it attempted a divorce from the rest of the industry.

J.D. Johnston is himself feeling quite optimistic these days. A year and a half ago, as Greyhound was battering away at the regional bus carriers, Johnston was hired to take over the National Trailways Bus Association. It was the remaining coalition of Trailways companies left after Greyhound purchased Trailways Lines, Inc., and had been relatively stagnant but profitable ever since.

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