Blue Bird Corp (BLBD): Spitfire Capital Fires Letter To The Board, Still Opposes Takeover

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D/A

Under the Securities Exchange Act of
1934

(Amendment No. 1)

Blue Bird Corporation

(Name of Issuer)

Common Stock par value $0.0001 per share

(Title of Class Securities)

095306106

(CUSIP Number)

Julian A.L. Allen

Spitfire Capital, LLC

222 Front Street, Suite 401

San Francisco, CA 94111

(415) 878-1901

(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)

August 1, 2016

(Date of Event Which Requires Filing of
this Statement)

If
the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box x.

Note:
Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7
for other parties to whom copies are to be sent.

The
information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section
18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the Notes).

Potential
persons who are to respond to the collection of information contained in this form are not required to respond unless the form
displays a current valid OMB control number.

Item
1. Security and Issuer

The
title of the class of equity security to which this statement on Schedule 13D relates is the Common Stock, par value $0.0001 per
share (the “Common Stock”) of Blue Bird Corporation, a Delaware corporation (the “Issuer”).

This
Amendment No. 1 to Schedule 13D (this “Amendment No. 1”) amends and supplements the statement on Schedule 13D (the “Original
Schedule 13D”), filed on July 26, 2016 by the Reporting Persons, relating to shares of Common Stock.

All
capitalized terms contained herein but not otherwise defined shall have the meanings ascribed to such terms in the Original Schedule
13D.

Except
as specifically amended by this Amendment No. 1, the Original Schedule 13D is unchanged.

The
address of the Issuer’s principal executive offices is 402 Blue Bird Boulevard, Fort Valley, Georgia 31030.

Item
4. Purpose of Transaction

Item
4 is hereby amended by deleting Item 4 of the Original Schedule 13D in its entirety and replacing it with the following:

The
Shares covered by this statement were originally acquired in the ordinary course of business solely for investment purposes and
not for the purposes of participating in or influencing the management of the Issuer.

On
July 20, 2016, American Securities LLC submitted a non-binding indication of interest letter to the special committee of the board
of directors of the Issuer for the acquisition by ASP BB Holdings LLC (“Holdings”) of all of the outstanding fully-diluted
equity of the Issuer not currently owned by Holdings and its affiliates (the “Transaction”). The Reporting Persons currently
intend to oppose the Transaction, and such opposition may result in any of the actions specified in Items 4(a) through 4(j) to
the Schedule 13D general instructions.

The
Reporting Persons today amend the Original Schedule 13D to include the letter attached hereto as Exhibit B (the “Letter”)
and the Appendix to the Letter, attached hereto as Exhibit C.

The
Reporting Persons sent the Letter to the Special Committee of the Board of Directors of the Issuer to express their opposition
to the Transaction which Spitfire Capital believes significantly undervalues the Issuer.

In
addition, as investors in the Issuer, the Reporting Persons have had and may continue to have general discussions with representatives
of the Issuer regarding various matters relating to the business and operations of the Issuer, including the Transaction. The
Reporting Persons have also had and may continue to have conversations with other stockholders of the Issuer. In the course of
such conversations with members of management, the board of directors and other stockholders, the Reporting Persons may suggest
actions that could result in, among other things: (a) the acquisition by the Reporting Persons of additional securities of the
Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization
or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries; (d) changes in the present board of directors or management of the Issuer; (e) a material change
in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate
structure; (g) changes in the Issuer’s certificate of incorporation or bylaws or other actions which may impede the acquisition
of control of the Issuer by any person; (h) causing any class of the Issuer’s securities to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended; or (j) any action similar to those enumerated above.

In
addition, the Reporting Persons also intend to review their investment in the Issuer on a continuing basis. Depending on various
factors, including, without limitation, the Issuer’s financial position and strategic direction, the outcome of the discussions
and actions referenced above, actions taken by the Issuer’s board of directors, changes to the composition of the board of directors,
price levels of the Common Stock and other securities, other investment opportunities available to the Reporting Persons, conditions
in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions
with respect to their investment in the Issuer as they deem appropriate including, without limitation, (i) purchasing additional
securities of the Issuer in open market or privately negotiated transactions; (ii) selling all or part of the securities of the
Issuer owned by such Reporting Person in open market or privately negotiated transactions; and/or (iii) one or more combinations
of the foregoing. Any open market or privately negotiated purchases or sales, acquisition recommendations or proposals or other
transactions may be made at any time without prior notice.

Item
6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

On
August 1, 2016, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint
filing on behalf of each of them of statements on Schedule 13D with respect to securities of the Issuer, to the extent required
by applicable law. A copy of this agreement is attached hereto as Exhibit A and is incorporated herein by reference.

Other
than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or
between the Reporting Persons and any other person, with respect to the securities of the Issuer.

Item 7. Material to Be Filed as Exhibits

SIGNATURE

After
reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.

EXHIBIT A

JOINT FILING AGREEMENT

In
accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to
the joint filing on behalf of each of them of a Statement on Schedule 13D (including additional amendments thereto) with respect
to the shares of Common Stock, $0.0001 par value, of Blue Bird Corporation, a Delaware corporation. This Joint Filing Agreement
shall be filed as an Exhibit to such Statement.

EXHIBIT B

August 1, 2016

Special Committee of the Board of Directors
Blue Bird Corporation
402 Blue Bird Boulevard
Fort Valley, Georgia 31030
Attention: Daniel J. Hennessy

Dear Dan:

Spitfire Capital LLC (“Spitfire Capital”) is the
investment manager of The Spitfire Fund L.P., The Spitfire Qualified Fund L.P., Saunwin Domestic Equities Fund LLC and ABA Stocks
LLC (together, the “Spitfire Funds”). As of July 25, 2016, the Spitfire Funds owned in the aggregate 1,523,601 shares
of Blue Bird Corporation (“Blue Bird” or the “Company”), representing 7.3% of the Company’s common
stock outstanding. We initiated our position in the Company in June, 2015, and are the Company’s third largest common shareholder.

On July 20, 2016, American Securities LLC (“American Securities”)
submitted a non-binding indication of interest to the Special Committee of the Board of Directors of the Company for the acquisition
by ASP BB Holdings LLC (“Holdings”) of all of the outstanding fully-diluted equity of the Company not currently owned
by Holdings, based on a per-share valuation of $12.80 to $13.10 per common share (the “Proposal”). On July 26, 2016,
Spitfire Capital filed a Schedule 13D to reflect its intent to oppose the Proposal, and subsequently met with the Company’s
management team to further discuss its views. We are writing to reiterate our opposition to the Proposal and to outline our thoughts
on the Company’s valuation for the benefit of the Special Committee as it considers the Proposal.

The domestic school bus industry is growing and is in the mid-stage
of its recovery. As property taxes are a key funding source for school buses, school bus shipments are correlated with the U.S.
housing market. Since 2011, school bus shipments have grown at over 5% per year and are approaching the 30-year average of 30,530
shipments¹. Blue Bird management has projected continued industry growth given
the sustained recovery in housing prices, growing student enrollment and the need to replace aged buses².

Blue Bird is increasing its market share. Based on R.L. Polk
data, Blue Bird has grown market share from 23% five years ago to 30%³, in part
as a result of its innovative powertrain offerings. Blue Bird is the leading provider of alternative fueled school buses. The Company
has over six times the number of registered propane powered buses compared with its competitors⁴.
Blue Bird is also the first OEM to offer a gasoline-powered bus, which will provide an attractive, low price alternative to customers.
As a result of sustained industry growth and continued market share gains, we anticipate that Blue Bird will continue to grow its
bus shipments and revenue over the coming fiscal years. We attended the STN Expo in Reno, Nevada last week and were impressed with
the energy and enthusiasm expressed by Blue Bird’s dealers regarding the industry outlook and the Company’s product
line.

¹
Source: R.L. Polk data and Blue Bird management (Roth Capital Partners Conference presentation dated March 13, 2016,
page 5, http://investors.blue-bird.com/presentations.aspx?iid=4042668).

²
Roth Capital Partners Conference presentation, page 6.

³
Roth Capital Partners Conference presentation, page 12.

⁴
Roth Capital Partners Conference presentation, pages 12 and 17.

During the fiscal second quarter earnings call on May 23, 2016,
management reaffirmed revenue guidance for the fiscal year ending October 1, 2016 of between $960 million and $985 million, representing
growth of between 4% and 7% relative to the prior year. Management also reaffirmed full year Adjusted EBITDA guidance of between
$72 million and $75 million, an increase of between 3% and 7%. Profits are growing as a result of the improving product mix (propane
and gasoline-powered buses carry higher gross margins); growing, higher margin parts and service revenue; higher productivity and
fixed cost leverage.

Blue Bird generates substantial free cash flow and its business
model is not capital intensive. The Company operates with negative working capital as dealers pay for buses before suppliers are
paid and capital expenditures have averaged less than one percent of revenue. Free cash flow is a key driver of shareholder value
as it will support continued debt pay down and deleveraging of the balance sheet, investment in the business and return of capital
to stockholders⁵. Based on management’s guidance of free cash flow of between
$30 million and $35 million for the full year, the Company will generate between $47 million and $52 million of free cash flow
in the second half ending October 1, 2016, a mere nine weeks away. Second half free cash flow represents between $1.81 and $2.00
in incremental value per share. Management signaled its confidence in the Company’s cash flow by making a $25 million prepayment
on its term loan on June 30, 2016. We estimate that the Company will generate a further $98 million of free cash flow over the
next two fiscal years, representing $3.80 in incremental value per share.

It should therefore come as no surprise that we believe that
the Proposal dramatically undervalues the Company. At $12.80 to $13.10 per share, the Proposal represents less than seven times
the consensus estimate of Fiscal 2016 Adjusted EBITDA and about six times the consensus estimate for Fiscal 2017. The Proposal
provides no value to stockholders for the Company’s revenue growth or improving margins. Equally, the Proposal provides no
value for the free cash flow generation outlined above.

We believe that modest assumptions regarding revenue growth,
EBITDA margin and free cash flow support a near term value of between $22 and $28 per share. Our analysis is based on projected
fiscal 2018 revenue of $1,056 million, representing annual growth of only 4%; adjusted EBITDA margin of 8.5%, below management’s
long term objective of 10%; and cumulative free cash flow of $145 million⁶. By
the end of the 2018 fiscal year, the Company will have nearly extinguished all of its debt, thereby eliminating any balance sheet
risk and creating substantial financial flexibility to further drive shareholder value through investment in the business, potential
M&A, as well as distributions to shareholders in the form of dividends and stock repurchases, as appropriate. We summarize
our analysis below and have attached our valuation framework as an attachment to this letter, together with slides from the Company’s
presentations.

⁵
The Company’s net debt resulted from a $227 million special dividend paid to the Company’s former majority owner and
was not incurred to finance investment in or by the Company.

⁶ From April 2, 2016 through September 30, 2018.

Given our high degree of confidence in the industry, in Blue
Bird’s competitive position and in the management team led by Phil Horlock, and the very low interest rate environment, we
are not prepared to accept a material discount to our estimate of near term value. Furthermore, we believe that the Company will
continue to compound value and generate free cash flow beyond 2018.

We believe that the timing of the Proposal was highly opportunistic
as it was submitted by American Securities in advance of the Company’s fiscal third quarter earnings release, scheduled for
August 4^th. We believe that third quarter earnings will benefit from the seasonal increase in bus deliveries⁸
and deliver substantial free cash flow. Allison Transmission Holdings, Inc. (NYSE: ALSN), a key supplier of transmissions to the
school bus industry, stated on its earnings conference call on July 28, 2016 that, “the school bus end market was up tremendously
in the second quarter, up 29% year-over-year”⁹.

American Securities characterized Blue Bird as a company with
a leading, defensible market position, operating in an industry with stable underlying demand and blessed with a proven management
team committed to investing in and building the business. As we have demonstrated, we believe that the Proposal understates the
attractiveness of the Company given the growth in the school bus industry, the success of the Company in increasing market share
and its highly cash generative business model. We urge the Special Committee to ignore the Proposal and allow the management team
to drive increasing value for the benefit of all of the Company’s stockholders.

⁷
Based on between 28.4 million and 29.0 million fully diluted shares outstanding, which assumes conversion of the Preferred Stock
and cashless exercise of all warrants.

⁸
2016 Fiscal Second Quarter Earnings Call Presentation dated May 23, 2016, page 16.

⁹
Allison Transmission Holdings, Inc. Q2 2016 Earnings Call transcript, page 10. Please note that Allison’s second quarter
corresponds to Blue Bird’s fiscal third quarter.

We are available to discuss the Proposal and our analysis at
any time.

Yours Sincerely,

EXHIBIT
C

Blue Bird Corporation Valuation Framework August 1, 2016

Financial Projections Over the next 2 years, EBITDA will grow over 30% and the balance sheet will be de – risked. Note: 2016 and 2017 based on consensus estimates. 2018 assumes 4% revenue growth and 20% incremental EBITDA margin . Confidential 2 Revenue EBITDA Free Cash Flow Net Debt 5.3% Growth Margin Leverage Ratio 4.9% 4.0% 7.5% 8.0% 8.5% 1.5x 0.8x 0.1x Target 10% 2016 2017 2018 Spitfire Capital LLC $968 $1,015 $1,056 $72 $82 $90 $30 $44 $55 $109 $65 $10 ($ in millions)

Blue Bird should compound value over time, with significant near term equity upside of over 90%. Confidential 3 Stock Price (1) Based on 2018 estimated EBITDA of $90 million, an 8.0x multiple, cumulative free cash flow of $145 million and 28.7 million fully diluted shares which includes full conversion of the Preferred S tock and cashless exercise of all warrants . Equity Value Drivers Spitfire Capital LLC $12.95 $24.72 $2.65 $2.65 $5.01 $1.46 $- $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 ASP Proposal Revenue Growth Margin Growth Free Cash Flow Multiple Target (1)

Revenue growth, margin expansion and free cash flow are the key drivers of equity value accretion. Note: Assumes 28.4 million to 29.0 million fully diluted shares outstanding, which includes conversion of the Preferred Stock and cashless exercise of all warrants . Confidential 4 Multiple 7 .0x 8.0x 9 .0x Enterprise Value Estimated Net Debt at 9/30/18 Equity Value Implied Share Price % Change vs. ASP Proposal Fiscal Year 2018 EBITDA $90 $90 $90 $630 $720 $810 $10 $10 $10 $620 $710 $800 $21.85 $24.72 $27.60 69% 91% 113% Valuation Framework Spitfire Capital LLC ($ in millions, except per share items)

C omparable public companies trade at about 9x EBITDA. Source: Factset Research Systems. Confidential 5 8.9x 6.9x 8.5x 10.0x 9.0x 7.6x 9.6x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x 11.0x Blue Bird New Flyer Oshkosh Thor Winnebago Federal Signal Comparable Company Analysis Spitfire Capital LLC

Blue Bird Investor Slides

Future Growth &
Profit Drivers Industry Volume Upside School Bus Market Recovery Future
Growth & Market Share Growth Profitability Increasing Propane Penetration Continuous Product Enhancements Dealer Network Improvements
Higher Operating Margins Second Shift Drive Productivity Deliver Parts Growth Long-Term Financial Objective: EBITDA 10% of Sales
New Markets & Products International & Commercial Buses Roadmap to future EBITDA growth 16

Market Recovery
Type C/D School Bus Recovery Historical Registrations Projected Registrations Historical Avg. (’85-’15) 40,000 37,641 34,884 35,000
32,200 Mean: 30,530 30,000 25,000 23,821 20,000 15,000 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
2015 2017 2019 Source: Historical results are based on RL Polk vehicle registration data, and the estimated 2014-2016 periods
are based on Blue Bird management’s forecast model, which registration data, population of school age children forecasts
from the National Center for Education Statistics and bus ridership data collected and published by an industry magazine (School
Transportation News) Housing price recovery and aged fleet driving industry growth 5

Positive Outlook New
School Bus Registrations vs. CoreLogic Housing Price Index New Registrations (North America) HPI 40 250 35 Buses 200 30 of 25
150 Thousands 20 15 100 10 50 5 0 -2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E Total Projected U.S.
Enrollment (000’s of Enrolled Students) 2014 2020 Enrollment Growth of ~2 Million Students Property taxes are a key funding
source for school bus purchases and are related to housing values *HPI data from CoreLogic, normalized to Jan of 2005 6

Continued Propane
Momentum Propane Sales Propane Customers 1,688 +14% 1,476 478 +33% 359
FY2014 FY2015 FY2014 FY2015 Propane Market Leadership 14% unit volume growth over FY2014 33% increase in propane customers over
FY2014 6x more propane-powered buses registered than other manufacturers¹ Highest owner loyalty in the market¹
Propane Advantages Lowest total cost of ownership Proven durability & performance Environmentally friendly Domestically
produced fuel Great cold weather starting performance Designed-in safety features Exclusive Ford/ROUSH RelationshipsOfferings exclusive to Blue Bird Strong growth with significant
upside for customer penetration ¹ Based on FY2015 R.L. Polk registration data 17

Strong Interest in
New Gasoline-Powered Bus Blue Bird is the only major manufacturer currently
taking orders on Type C gasoline- powered school buses Lower acquisition cost than other fuel types Maintenance and service is
simpler Strong cold-weather starting capability Utilizes
Ford’s modern 6.8L V10 gasoline engine 5-year/unlimited mileage warranty Blue Bird exclusive offering from Ford and ROUSH
CleanTech Currently taking orders with strong interest Begins shipping in fiscal 4Q Great new choice for customers focused on
acquisition price 8

Launching Four New
Powertrains Gasoline Engine V8 Diesel Engine Blue Bird is the only manufacturer to offer a Type C Blue Bird is the only gasoline-powered school bus manufacturer
to offer the Cummins ISV 5.0L V8 diesel
Lower acquisition cost than in a school bus other fuel types
Lower acquisition cost than
Maintenance and service is other diesel offerings simpler for technicians
Improved fuel economy
Strong cold-weather starting capability
Quietest diesel engine on the
Utilizes Ford’s modern 6.8L road V10 gasoline engine
Better serviceability
Blue Bird exclusive CNG Engine Dual-Clutch 7- Speed Transmission
Lower acquisition cost than
First dual-clutch, seven-speed Type D CNG-powered school automatic transmission bus available for school buses in North America
Lower fuel and maintenance
Electronic shifting
provides cost than diesel optimal fuel efficiency and smooth, continuous delivery Environmentally friendly of torque Utilizes Ford’smodern 6.8L Accelerates and optimizes shift points V10 engine Adds features that make bus Blue Bird exclusive easier to drive Industry leader in breadth
of powertrain offerings 19

Financial
Guidance Metric FY2016
Guidance ($ Millions)
Net Sales $ 960-985
Adj. EBITDA $ 72-75
Free Cash Flow $ 30-35
Reaffirming FY2016 Full-Year Guidance 17

Our Production Plans
Support Seasonality Higher
Second Half registrations R.L. Polk Unit influenced by desired delivery just prior to school start Registration Seasonality Based
on 3-Year Average¹
New second shift enables more buses to be produced in “high 67 % season” with peak daily production capacity 50% higher
than prior year
Majority of sales and profits occur in Second Half of fiscal year 33 %
Revenue seasonality more pronounced in FY2016
Important to look at the business over the longer term Oct – Mar Apr – Sep (First Half) (Second Half) Two-thirds of annual new
school bus registrations in Second Half ¹ Based on R.L. Polk FY2013-FY2015 registrations 16

Wrap-Up Solid second
quarter result supports full-year plan Gross margin percentage up over
prior year More volume shifts to Second Half supported by our new second shift Third quarter production schedule is full Strong
propane bus progress with sales up 46% in First Half Great order momentum with new gasoline-powered Vision bus High level of quote
activity supports our positive outlook for the year Reaffirming FY2016 Guidance for net sales, Adjusted EBITDA and free cash flow
18

Great Time to Invest
27