Greyhound's Third Quarter Reflects Launch of Air Service

Business Wire, Sept 16, 1996

CALGARY, Alberta--(BUSINESS WIRE)--Sept. 16, 1996--GREYHOUND CANADA (TSE:GHC) Greyhound Canada Transportation Corp. (Greyhound) announces its consolidated operating results for the two month period ended July 31, 1996. Pursuant to a plan of arrangement, Greyhound is carrying on the former transportation business of Greyhound Lines of Canada Ltd. (GLOC) effective May 31, 1996. As a consequence of this restructuring and the selection by Greyhound of a different fiscal year end compared to GLOC, the third quarter results include only the two month period ended, July 31, 1996 rather than a full three month quarterly period. For comparison purposes, the actual two month results of Greyhound are compared to GLOC's results for the same period in 1995 which were restated to give effect to the restructuring. The commencement of Greyhound's air service initiative has increased both revenue and operating expenses and is commented on under air transportation services below.

With only a two month operating period and a very heated competitive environment, Greyhound generated consolidated revenues of $36.8 million, an increase of $3.8 million or 11.4 percent compared to $33.0 million for the same period last year. Net income, before the inclusion of the air service initiative, was $1.8 million or $0.21 non-diluted earnings per share compared to $2.4 million or $0.29 non-diluted earnings per share for the corresponding period last year. Net income, including the air service initiative, was $1.1 million or $0.13 per share compared to $2.4 million or $0.29 per share. On a fully diluted basis, earnings per share were $0.12 including the air service initiative compared to $0.29 for the same period last year.

GROUND TRANSPORTATION SERVICES

Total ground transportation revenues were $31.5 million compared to $33.0 million for the same period a year ago. Operating income for the two month period was $3.7 million or $1.2 million lower than the same period last year.

Passenger revenues decreased $2.0 million or 9.6 percent as a consequence of an 8.5 percent decline in ridership and a 1.1 percent decrease in yield. Ridership declined mostly in western Canada as a result of the recent start up of Westjet. As was anticipated, the low fares offered by this carrier, which are being matched by the major Canadian air carriers, is eroding bus ridership. In response, the Company has adjusted schedules, frequency of service and capacity. Also, in order to ensure the continued competitive price/value relationship on the company's bus service, fare adjustments have been made on certain routes. On long distance bus routes, traffic levels continue to be affected by the air travel options offered by the scheduled Canadian and charter air carriers and the recently introduced Greyhound Air services.

"We are seeing evidence that a trend is developing where passengers are using the bus network to travel to and from Greyhound Air departure points," said Dick Huisman, President and Chief Executive Officer of Greyhound.

Charter revenues were $2.8 million compared to $2.2 million for the same two month period a year ago.

Greyhound Courier Express revenues were $9.5 million or $0.1 million less than the same period last year. Shipping volumes were lower by 5.1 percent however, this was partially offset by a 4.6 percent improvement in rates. Personal shipping volumes represented by collect payment method over the period, were down indicating that the Canadian economy is still affecting the individual Canadians' discretionary spending levels.

During the two month period, ground transportation operating expenses were lower by $0.3 million or 1.1 percent.

AIR TRANSPORTATION SERVICES

On June 8, 1996, the Company commenced selling air tickets under the brand name "Greyhound Air." The first flight was on July 8. This new air service provides the Canadian public with a unique, low priced travel option. Toronto, Hamilton and Ottawa in the east, and Calgary, Edmonton, Kelowna and Vancouver in the West are linked with up to twice daily service through Winnipeg. The air network provides connections to Greyhound's bus network of over 1,100 communities. The aircraft and all air operations are provided by Kelowna Flightcraft Air Charter Ltd.

During the 24 day period, from July 8 to July 31, Greyhound Air revenues totalled $5.3 million based on an overall load factor of 69.5 percent. "In spite of the very short sales launch period from June 8 to July 7, we are very pleased with the overall load factor for the 24 day operating period. We feel the strong support, with little advance booking opportunity, shows Canadians are eager for a new and distinct travel service in Canada. We consciously decided to offer lower prices, accepting a lower yield, to get passengers to use our service. The commencement of bookings on June 8 was two months later than the original sales launch date due to the delays in approval for the new service. Typically, passengers book their travel arrangements months in advance of the traditional summer period, but with the delays, the company was not able to take advantage of the longer sales period that otherwise would have been available," said Huisman.