NAPERVILLE, Ill. -- Laidlaw International Inc. has reported sharply higher fiscal third-quarter earnings, with its Greyhound Lines subsidiary contributing to the gain despite a 9 percent drop in revenue.

Laidlaw also disclosed that federal antitrust regulators are seeking additional time to review the pending $2.8 billion sale of Laidlaw to FirstGroup PLC, the largest bus operator in the United Kingdom.

For the three months ended May 31, net income at the nation's largest private provider of school bus services climbed 79 percent, to $61 million, or 77 cents a diluted share, from the year-ago quarterly earnings of $34.1 million, or 35 cents a share.

The year-ago quarter was hurt by a $9.4 million loss from discontinued operations.

At Greyhound, fiscal third-quarter revenue totaled $269.9 million, down 9.4 percent from a year-ago figure of $297.9 million. For the nine months ended May 31, revenue at Greyhound was $820.7 million, down 8.4 percent from last years $896.3 million.

Laidlaw attributed the drop in Greyhound revenue to "passenger reductions resulting from the elasticity effects of previous price increases, network changes and the non-recurrence of prior year hurricane-related volume."

Translated into English, that means fewer people rode Greyhound coaches because of higher ticket prices, it operated a smaller route structure this year, and people displaced by Hurricanes Katrina and Rita stopped traveling to and from their former homes.

Additionally, this springs strike by Greyhound employees in western Canada cost the company about $5 million in revenue.

Greyhounds operating income before depreciation and amortization, which is called EBITDA on Laidlaw financial statements, rose during the latest quarter but was down for the nine months ended May 31.

Greyhounds EBITDA for the third fiscal quarter was $23.6 million, up 3 percent from last years $22.9 million. That gain was attributed to reduced compensation expenses and insurance costs.

For the nine months ended May 31, Greyhounds EBITDA was $66.4 million, down 21 percent from the prior years $84.1 million. Higher margins earned on increased passenger volume boosted results last year.

In its latest financial report, Laidlaw offered a 'merger update' on its acquisition by FirstGroup.

Shareholders of both companies approved the proposed combination at meetings in April, but U.S. antitrust regulators continue to eyeball the deal, which would combine Laidlaws school bus operation with that of FirstGroup, which is the No. 2 private operator of school buses in the U.S.

At the end of April, Laidlaw disclosed the Justice Department had requested additional information from both companies. The two firms have completed the process of providing the information, and will shortly certify they have done so.

Generally, the Justice Department is obliged to complete its antitrust review within 30 days of the day of such a certification, Laidlaw said. However, the Justice Departments antitrust division has asked Laidlaw and FirstGroup to enter into an agreement that would provide the antitrust division with 'additional time to complete its review, effectively extending the review period.'

It has been widely speculated the Justice Department may require the companies to divest some school bus operations.