A month after filing for Chapter 11 bankruptcy protection, 40-year-old school bus contractor Atlantic Express is ceasing operations by the end of the year after a New York City union rejected a labor contract the company's lender required to continue financing.
The union vote by members of the Amalgamated Transit Union 1181-1061, AFL CIO on Wednesday rejected the reduced wages offered by Atlantic Express that spokeswoman Carolyn Daly said were necessary to keep the company solvent.
"We are very disappointed with the outcome of the union vote," she said. "Our goal was two-fold: to enable Atlantic Express to continue our operations in a competitive and financially stable structure to ensure we continued our leadership in the school bus industry while preserving jobs and our company. We gave the union our best offer, which was significantly better than what the new companies in the industry are providing."
As a result, Daly added, Atlantic Express could not produce the cost savings required by Wells Fargo, which means the company must sell all assets and routes not only in the New York area but across the country. The contractor operates a coach division in addition to its school buses, mostly in New York, Massachusetts, California and Pennsylvania.
Earlier this year, Mayor Michael Bloomberg required New York City school bus contracts to be rebid for the first time in 34 years to rein in runaway costs.
The rebidding began last December and included contractors that do not utilize contracted labor, which meant that companies required under contract to use labor such as Atlantic Express had to renegotiate wages to be more competitive. In January, the ATU Local 1181 went on strike to protest the elimination of employee protection provisions, which give job security to senior employees, from the rebid contracts. Though the drivers returned to work in mid-February, they grumbled at the prospect of reduced wages.
Now, some 2,000 NYC employees of Atlantic Express will be out of a job after the holidays, but most will be eligible to be picked up by other unionized companies based on seniority.
Meanwhile, school districts from Philadelphia to Los Angeles are scrambling to implement contingency plans for transporting students who would have been riding Atlantic Express buses to and from school.
"Atlantic Express has had the great privilege and honor of serving many great school districts, municipalities and regions for over four decades," said Daly. "As we begin the process of closing our business, we will work closely with all of our customers on contingency plans to ensure as smooth a transition as possible for everyone concerned."
Daly said that bids from companies interested in acquiring Atlantic Express' routes were expected today in bankruptcy court, which must first sign off on the closure. Then, individual customers will do the same before operations can resume under new contractors.
After filing for Chapter 11 and announcing that operations would remain unaffected, Atlantic Express sent a letter to its 5,500 employees nationwide explaining to them that the company's future hinged on the union vote. At the time of its Chapter 11 filing, Atlantic Express also said it planned the reorganization and debt protection "to explore the availability of additional debt or equity financing, market its assets for sale and continue its challenging labor negotiations for a new collective bargaining agreement with the Local 1181-1061."