Greyhound Canada says government rules require it to run unprofitable service to small towns, and it can no longer bear the costs. (Shannon Stapleton/Reuters)Greyhound Canada said Thursday that unless it gets $15 million in government aid, it will cease passenger bus operations in Manitoba and northwestern Ontario because it is being forced to operate unprofitable rural routes without government help.

The company, a subsidiary of Dallas-based Greyhound Lines Inc., also said it is reviewing its operations in Alberta, Saskatchewan, British Columbia, the Yukon and the Northwest Territories.

Despite Greyhound's insistence that it is in "dire" financial straits, federal and provincial politicians called the announcement a ploy.

Passenger service in Manitoba will end Oct. 2 and routes in northwestern Ontario will stop operating Dec. 2, Greyhound said, though parcel shipping will be unaffected.

Stuart Kendrick, senior vice-president of Greyhound Canada, said government is to blame for the company's financial situation.

Kendrick said current rules force Greyhound to run trips to unprofitable sites in small-town Canada, which can no longer be supported through money-making routes and bus parcel operations, or through other revenue sources.

"Despite numerous attempts over the years to adjust this business model in order to gain a profitable footing, Greyhound Canada has now run out of options," Kendrick said Thursday.

"We have repeatedly asked the federal and provincial governments to change the existing legislative and regulatory regimes that govern intercity bus operations."

Greyhound is asking for a $15-million subsidy so it can break even on its unprofitable routes over the next year while it negotiates with the provinces and Ottawa, spokesperson Karen Gordon told CBC News.

Gordon said the amount represents half the cost of operating the company's non-profitable routes and the bus carrier currently receives no other public subsidies in Canada.

Ottawa has overall authority over intercity bus transportation but delegates regulatory power to the provinces. Provincial transit boards "designate which routes must operate, at what frequency, and even which equipment," Gordon said.

Bullying: transport minister

Federal Transport Minister John Baird said the bus line is trying to bully the provinces by announcing the service cuts. The company is being "heavy-handed" in an effort to get subsidies, he said.

"Greyhound is a Texas-based multinational.… They're seeking tens of billions of dollars of taxpayers' money as a subsidy."

Politicians say Greyhound's announced service cuts are a tactic to squeeze money out of governments. (Nam Y. Huh/Associated Press)

The company is the largest provider of intercity bus transportation in Canada, serving 700 communities with 1,000 daily departures. It also operates in Quebec, New Brunswick and Nova Scotia.

Its service cuts would kill 200 jobs in Manitoba and 30 in northwestern Ontario, according to the Amalgamated Transit Union, which represents drivers.

In August, Greyhound opened a new, $6.3-million bus terminal near Winnipeg's international airport, about eight kilometres from an older facility in the same area.

At the time, Greyhound had planned to run its 48 daily trips to places such as Brandon, Man., Calgary and Minneapolis, Minn., as well as its courier business, from that terminal.

Former Ontario NDP leader Howard Hampton, who represents the riding of Kenora-Rainy River in the northwest part of the province, said the timing of the new facility's opening and Thursday's service-cut announcement indicates a ploy by the company.

"I have no doubt that they're probably losing money in some places, but this is more than anything else a bargaining tactic," Hampton said.

'Cheapest option'

At the new Winnipeg station, passengers reacted with surprise and dismay at the news that Manitoba is first on the list to lose bus service. Several passengers said they rely on Greyhound every few weeks to travel from outlying towns into the city.

"It's the cheapest option a lot of the time," said Sam Nabi, a 19-year-old university student from Whitby, Ont., who was making his way back home on the bus after spending the summer in Alberta.

"I am very surprised. I thought it was always there. There are signs in some of the terminals saying, 'Greyhound here for 75 years,' and I don't know what other options there would be."

Manitoba Conservation Minister Stan Struthers, speaking in place of absent Transportation Minister Ron Lemieux, said the province will sit down with the carrier and Ottawa to come up with a solution that could involve financial help.

"It's not a done deal," Struthers said. "People living in little communities like Cranberry Portage in northern Manitoba really do depend on this service."

B.C. Transportation Minister Shirley Bond said Greyhound can't reduce or eliminate service in the province without a fight.

"This morning, my staff participated in a call with the federal government and other provinces as together we sort out how we're going to deal with this issue. Greyhound is a company. It is a business. We aren't going to speculate about subsidies today. We are going to reinforce the importance of service to rural Canadians," Bond said.

The mayor of St. Paul, Alta., said if Greyhound pulls out of the province, his community of 5,000 northeast of Edmonton will be hit hard.

"The ones that can't afford a vehicle, single people or somebody who just doesn't drive — they don't drive to the city, they take the Greyhound," Glenn Andersen said.

"And a lot of shipping from Greyhound through from larger centres to St. Paul comes that way, as a more economical way of shipping, and that would be devastating to St. Paul."

With files from The Canadian Press