Tuesday, August 25, 2009

S & P Removes YRC Worldwide from CreditWatch List

Credit ratings firm acknowledges progress at YRC, but underscores continued weakness in LTL market

Credit ratings firm Standard & Poor’s removed YRC Worldwide from its CreditWatch list this month, but maintained a “negative outlook” for the trucking company as weak volumes and competitive pricing pressure less-than-truckload carriers.

S&P pulled YRC Worldwide off CreditWatch Aug. 14 after Teamsters employees at YRCW’s largest less-than-truckload subsidiaries accepted wage and benefits cuts.

The financial intelligence division of McGraw-Hill placed YRC — the largest less-than-truckload operator in the U.S., when ranked by 2008 revenue — on its CreditWatch list with “negative implications” in April.

YRC Worldwide, burdened by debt as well as falling demand for its services amid intense competition, has lost more than $2 billion since 2007.

However, the carrier recently negotiated a second round of wage and benefit cuts with the Teamsters union that would save it more than $800 million by the end of next year. A majority of Teamsters at the company's largest subsidiaries approved those cuts Aug. 7.

S&P maintained its negative outlook on YRC Worldwide, rating its corporate credit as "CCC." A CCC rating means a company is "vulnerable," according to S&P, and "dependent upon favorable business, financial, and economic conditions to meet its financial commitments."

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