March 15, 2009 11:21 AM by: Lisa Fickenscher
NY Waterway's owner says next its berth is Chapter 11 bankruptcy protection.
When Captain Chesley Sullenberger landed US Airways flight 1549 in the Hudson River in January, NY Waterway ferries arrived at the scene within minutes, fishing 142 of the 155 airline passengers from the icy water. Then the company transformed its ferry terminals at West 39th Street and in Weehawken, N.J., into triage centers.
Two months later, NY Waterway is the one in dire need of a rescue. The firm, which transports riders to Manhattan from Weehawken and other New Jersey ports, could go bankrupt this year. Its situation is so precarious that the company is preparing a lawsuit against US Airways to recoup the expenses it incurred during the rescue effort.
“We are embattled,” says Chief Executive Arthur Imperatore Sr. “The question is whether we can survive.”
His list of woes is long. Ridership in February dropped 12% from year-earlier levels, to 26,400 daily commuters. Revenue has been declining since autumn and is now off by $800,000 a month. Complicating matters, the company's three-year equipment loan—which expires in September—will not be renewed by its lender, CIT Group, as that financial company moves to minimize risk.
Mr. Imperatore wants a public agency, such as NJ Transit or the Port Authority of New York & New Jersey, to acquire his company. He argues that the commuter ferry business is part of the mass-transit system and should be supported by public funds. He is likely to file for bankruptcy if he doesn't get his wish.
Captain Robert O'Brien, the U.S. Coast Guard's most senior official in New York, is concerned about NY Waterway's financial troubles.
“They are generally the Good Samaritan that responds to any emergency on the water,” he says.
During the 2003 blackout, the firm ferried 150,000 people out of Manhattan for free, forfeiting more than half a million dollars in fares. It also helped move people out of Manhattan on Sept. 11, 2001, and during the 2005 transit strike.
After the US Airways crash landing, NY Waterway was unable to operate some of its routes for nearly 48 hours. In addition, it paid employees overtime and incurred other expenses that it's still assessing as it prepares its claim against the carrier. Apart from the monetary issue, Mr. Imperatore is miffed that the airline's senior officials have yet to acknowledge his company's role.
Mr. Imperatore, the youngest of nine children, made his fortune in the trucking business. The 83-year-old multimillionaire started the ferry service 20 years ago after purchasing two miles of waterfront property in Weehawken, N.J., hoping to lure residents to the community.
To keep it afloat, he has spent his own money, including $20 million in the past three years alone.
Bailed out before
The last time Mr. Imperatore's venture ran into serious financial trouble, in 2005, real estate lawyer William Wachtel bailed it out. He took over 16 of the company's 34 boats—including the debt payments—and formed a separate company, BillyBey, which pays NY Waterway licensing and management fees to run that business.
Mr. Wachtel says that while ridership is down on his routes from Hoboken and Jersey City to the World Financial Center, BillyBey is “not in financial straits.” Nevertheless, he says it makes sense for a public transportation system to run the ferry business. “If public agencies see this as a good time to take over, then it's a vision I can embrace,” says Mr. Wachtel.
It's unclear whether government agencies agree. A spokesman for the Port Authority says, “We have a strong commitment to a healthy regional ferry service, and we have ongoing discussions with our partners,” but he declined to elaborate on specific talks with NY Waterway.
Mr. Imperatore doesn't relish ceding the company to others, but he simply can't support it anymore.
“I don't have any more money to invest,” he says. “It's like a bottomless pit.”
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