Greyhound’s comeback

May 1, 2012, 2:49 PM UTC

FORTUNE — In 2008, a mentally ill passenger repeatedly stabbed and decapitated his seatmate on a Greyhound bus in Canada. It was yet another indignity for the faded brand — the largest intercity bus operator in North America had, since 1990, changed hands twice and gone through two bankruptcies. It was the cheap and dirty travel option of last resort. And yet today Greyhound is alive and, if not yet resurgent, revitalized thanks to its new owner, the $10 billion Scottish-based transport operator FirstGroup.

As of April, FirstGroup has either replaced or renovated (at $130,000-a-pop) half its U.S. fleet — about 670 vehicles — and added Wi-Fi, AC outlets, and legroom. Greyhound also launched Bolt Bus, a joint venture with Peter Pan lines, in 2008. The intercity bus network caters to a younger, hipper crowd. It has also started reevaluating its once-famously seedy terminals, revamping many, moving some, and building more ticketing kiosks. (Bolt, it should be noted, does not have terminals.) It’s also overhauling its meandering network to focus on its most popular city-to-city express routes. Today, 60% of Greyhound’s business is centered around major urban centers. And FirstGroup is capitalizing on the brand’s name recognition back in the U.K. by launching a Greyhound-branded bus service there.

The last piece of the overhaul, says CEO Dave Leach, is changing the culture. Over the course of two years, he plans to travel across the country and meet with groups of 10 to 15 employees at a time to get feedback and present his vision of a younger, cleaner, newer Greyhound. Leach, who started at the company 26 years ago as a baggage handler, says the response so far has been overwhelmingly positive.

“It’s a completely different business,” Leach says of Greyhound’s latest iteration. “This is an exciting company, it really is.”

All it needs now is a first-class cabin and salted peanuts.

A shorter version of this story appeared in the April 30, 2012 issue of Fortune.