Swift Transportation is on the verge of losing its $2 million contract with Brown Transportation.
The school transportation service was expected to begin operating on May 1.
The company’s board of directors met Monday morning to discuss the move.
“As soon as we learned of the change of direction, we had a strong feeling that this was the right time to terminate the agreement,” said a spokesperson for the company.
Swift, a subsidiary of the Chicago-based Chicago-Dominion Bank, has been a dominant provider of bus service in Chicago for more than 40 years.
Its fleet of buses is valued at more than $1.5 billion.
The bus company says it has about 9,000 buses and about 10,000 school vehicles.
The contract, which is worth $1 million a year, includes payments over the life of the agreement.
Swift has about 1,200 employees, according to the company’s website.
The decision to terminate contract with the school transportation company comes as Swift is on a major overhaul of its fleet.
“We’ve spent the last two years working on our bus fleet to better meet the needs of our students,” the company said in a statement Monday.
“Over the next several months, we will be looking at our buses and school transportation options.”
It’s not clear how Swift’s students and staff would be impacted by the change.
The board said it is in discussions with the company about the changes.
The spokesperson for Swift Transportation said the company is working with its customers and the city of Chicago to determine the best way to implement the changes that will be needed.
The spokeswoman did not return a request for comment from The Associated Press.
The news comes after the company announced it would replace a fleet of more than 2,000 of its buses with cheaper buses and hire thousands of people to help the company reduce the cost of its services.