Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 9, 1993 TAG: 9305090024
SECTION: BUSINESS PAGE: D-4 EDITION: METRO
SOURCE: TOM BELDEN STAFF WRITER
DATELINE: DALLAS LENGTH: Long
The beleaguered company was at war with its employees, under fire for eliminating service to many rural areas, fighting a reputation for poor service, and losing money.
But by the time Greyhound reached a tentative settlement of a three-year strike by its drivers last month, matters were quite different for the 80-year-old company, the only remaining U.S. bus line with a nationwide system.
In settling the bitter, often-violent dispute, Greyhound agreed to rehire about 550 striking drivers by July 1, pay the drivers $22 million in back pay using funds it set aside 18 months ago, and give them pay raises of almost 20 percent over the six years of the contract.
Settling the drivers' strike - which some observers thought might never end - lifted a cloud and will let management focus completely on running the company, securities analysts said.
But that's only one piece of good news at Greyhound.
The company is on solid financial footing again and logged a profit of $10.9 million last year. Its new computerized reservations system should help make it more competitive with airlines and Amtrak, the company said.
Now, Greyhound is looking for ways to expand its route system and is giving employees intensive training in customer service.
The new emphasis on customer service is a particularly good sign, said analyst Jan Loeb, a vice president of the Legg Mason Wood Walker brokerage in Baltimore. "It's always been viewed as a transportation business but now that's changing . . . Long-term, I'm positive on the company."
Now, to kick off a new marketing program including reduced fares, Greyhound has signed up B.B. King to tout the company in a splashy new advertising campaign.
The drivers' strike that started March 2, 1990, cost Greyhound dearly, but it also brought sweeping - and positive - change. In its first three months, the walkout cost Greyhound $30 million and drove the debt-laden company to seek Chapter 11 bankruptcy-court protection.
Under new senior managers installed two years ago, Greyhound reorganized, reduced its debt and emerged from Chapter 11 on Oct. 31, 1991. It has been profitable since, and last year made more money than any U.S. airline except Southwest. Its stock has doubled in value in the past year.
Greyhound's financial health is good enough that it recently floated 4 million shares of new stock in a public offering, with the proceeds to be used primarily to buy new buses.
But Greyhound's management has concluded that while technology - like new computer programs to help with demand and revenue forecasting - is vital, it won't be enough to help the bus company grow, according to president and chief executive Frank J. Schmieder.
Even before the strike settlement, Greyhound had begun training employees at every level in the importance of thinking of bus riders not just as passengers but as valued customers, Schmieder said in an interview at company headquarters in suburban Dallas.
Treating its mostly lower and middle-income customers with more respect "is the only way," he said.
"Our customers probably get the least service" of any members of society, he said. "All we have to do is give them dignity and treat them right and we're going to be very successful."
Schmieder added that management also knows that treating customers better won't happen unless Greyhound's own managers, supervisors and front-line employees learn to be more flexible and to treat one another with respect.
In the past, autocratic supervisors often created an unhappy, unproductive working atmosphere, and that must change, he said.
"People who deal with customers and with employees are going to have to change or they aren't going to be around," he said.
Another key change that Greyhound customers should begin to notice this summer is a greater use of pricing to sell more bus seats.
Aided by the new computer system, the bus company in March began taking reservations and selling airline-like discounted tickets to customers who buy in advance. The tickets are priced at 20 percent to 40 percent below regular fares on most routes. Like airlines, Greyhound will refund only half the price of an unused advance-purchase ticket.
The reservation system should improve Greyhound's ability to forecast demand, so it can offer more discounts when business is slack, Schmieder said.
And by knowing more about where and when its customers travel, the bus line can offer more express buses over long distances with fewer stops, he said.
Of all Greyhound's critics in recent years, some of the most strident were residents of rural areas who felt abandoned in the 1980s and early 1990s when the bus line tried to shrink its way to prosperity by cutting service to small towns.
When it filed for Chapter 11, Greyhound was losing money on a third of its routes. The company still serves 90 percent of the towns it did before trimming its route system; Schmieder said it had no choice about dropping service to the other 10 percent.
"It's really difficult to do that because when you take out bus service you're taking it from the segment of the population that needs it the most, he said. "But if it hadn't taken place, there wouldn't be a Greyhound today."
Now, he said, Greyhound is poised to begin growing again. There are 357 U.S. communities that Greyhound doesn't serve, but that meet a demographic model that says they might support service, Schmieder said.
"We've been going through the downsizing process," he said. "At some point we have to see what new opportunities are out there."
by CNB