Gray Line Hawaii yesterday announced it was ceasing operations, leaving more than 250 workers jobless at the end of the business day. Employees weren't notified of the closure until yesterday.
Company officials cited rising debt, a 30 percent decline in revenues from 1992 and dwindling neighbor island business as reasons for the closure.
"Unfortunately, we believed up until the last day or so that we could close a deal with our investor," attorney Ted Pettit said. "When it became apparent ... after many weeks of negotiations that we could not reach an agreement, the company had no choice but to shut down ... was having difficulty simply meeting its payroll."
Pettit said the company will pay its employees the wages they are due but may not be able to make any further payments.
"At this point they are free to file unemployment claims," Pettit said.
Gray Line employees on Oahu are represented by the Teamsters Local No. 142 and by the ILWU Local 996 on Kauai, Maui and the Big Island.
Pettit said Gray Line's assets are under tax liens and the company is finalizing agreements with its leasing companies to take back some 48 1- to 3-year-old buses to resell or lease.
Michael Carr, president of Polynesian Adventure Tours, said he's currently negotiating to acquire at least some of Gray Line's buses and its neighbor island licenses.
"But I'm certainly not going to make the same mistake they did - to commit to more equipment than our revenue can service," he said.
In 1992, 65 years after the business began, Gray Line set about renewing its fleet of 144 aging coaches "to regain clients that it had lost," a company spokesman said. By August, the company had shrunk operations by 67 percent and increased revenues dramatically.
But not enough.
"The problem was in the high cost of new motorcoaches, outer island operations that were operating at an average of 50 percent of capacity, and a concentration of its business in charter services where revenues are contained to $500 per eight-hour day versus as much as $1,600 per eight-hour day on a per seat sales basis," spokeswoman Elizabeth Schaller said.
She said the company planned to add 13 coaches to its fleet this year and anticipated profits in 1997.
Pettit said the closure shouldn't affect tour bus passengers right away.
Roberts Hawaii, a major competitor, reportedly has already signed up several of Gray Line's major clients and other carriers are taking up the slack for now.
"(But) any time you take 48 motor coaches out of ground transportation in a state this size, you're going to have a sizable gap in the ability to service customers," Pettit said.
"Nobody will be stranded," he said.
Begun in 1927 as Royal Hawaiian Transportation Co., the company acquired operations on the neighbor islands during the 1950s and became Gray Line Hawaii.
In 1994, former Gray Line President Robert Moore was sentenced to at least six years in prison for shooting his wife while they were in a parked car in 1992.
Gray Line Hawaii Ltd. is a subsidiary of GM Company Inc. and CM Holding Corp. Affiliated companies, Central Transportation Co. and Laupahoehoe Transportation Co., are not affected by the closure, officials said.