YRC Worldwide, Teamsters find their fates hitched

The Teamsters didn’t mince words.

The more than $800 million in concessions that members are voting on should “send a message to the industry players who are slashing prices in an attempt to force (YRC Worldwide Inc.) out of business that (YRC) will have the resources to be here for the long haul,” Tyson Johnson, freight division director for the International Brotherhood of Teamsters, said in a statement this month.

The recession has wedged YRC and its union into an unlikely high-stakes partnership. In the pot: the fate of a massive trucking company, roughly 49,000 jobs (35,000 of them union jobs) and one of the last big Teamsters toeholds in the freight industry. YRC accounts for nearly half of the Teamsters freight division’s 80,000 members.

“If YRC were to go out of business, the Teamsters would be hard-pressed to replace those jobs,” said John Wagner Jr., president of North Kansas City-based logistics company Wagner Industries Inc.

The fragile alliance must navigate a rocky road. Union workers’ votes on whether to take an extra 5 percent wage cut and let YRC halt pension payments for 18 months, among other measures, are expected to be counted by early August. And those workers already accepted other pay cuts and pension payment deferrals earlier this year. YRC, meanwhile, lost $257.4 million in the first quarter. It also has been attempting to manage costs by integrating subsidiaries, laying off thousands and closing facilities. Other efforts have involved renegotiating debts and selling property, including its Overland Park headquarters. Full Story.....

Teamsters consider extra 5 percent YRC Worldwide pay cut

YRC Worldwide Inc.’s union members will weigh an extra 5 percent pay cut on top of losing their pension contributions for 18 months, the union said Tuesday.

Leaders of local units for the International Brotherhood of Teamsters overwhelmingly endorsed the tentative plan at a Tuesday meeting in Chicago, the union said.

If union-represented YRC workers vote for the plan, the union this year would have gained options for as much as 35 percent of outstanding shares in the Overland Park, Kan.-based trucking company. The current plan also would require all YRC employees to take similar cuts, gain the union a YRC board appointee and bring in a corporate turnaround expert.

YRC and the Teamsters have been negotiating since June 29 about concessions that would provide YRC with the cash necessary to survive the recession. They reached a tentative agreement July 9 but didn’t release details until Tuesday.

The 5 percent wage cut, which would be effective until the union labor agreement ends in 2013, would mean a 15 percent total cut in wages this year. Early this year, Teamsters members agreed to a 10 percent cut in exchange for a 15 percent stake in YRC. The cost-of-living adjustment also is suspended through the contract, according to a document distributed at the Chicago meeting.

YRC would end its participation in union pension plans from July 1 through Dec. 31, 2010, meaning members don’t accrue pension benefits during that time. The company would have to resume participation and payments on Jan. 1, 2011. The move reportedly would save $500 million.

According to the document, YRC agreed to Teamsters demands that included gaining an appointee to the board, bringing in a turnaround consultant, offering the opportunity to get YRC stock options for an additional 20 percent of outstanding shares, bringing back bargaining-unit work that had been transferred to other countries, limiting the expansion of YRC Logistics and transferring its work back to the bargaining unit, restricting how the savings can be used, and requiring wages to revert to full rates should YRC file for bankruptcy or be sold. Job protections were added as well.

In addition, the document said, non-union workers at YRC will take equal pay cuts and, during the 18 months when YRC doesn’t participate in pension plans, won’t receive retirement benefits or 401(k) contributions.

YRC’s banks also agreed to “provide a fair share of the economic relief,” the document said, and YRC must provide the union with enough financial information that it can ensure the company’s compliance with plan provisions.

“Unfortunately, the freight recession has worsened for all trucking companies as 2009 has progressed, but it’s been more aggravated at (YRC) companies than any other trucking group operating in North America,” the Teamsters said in a document.

YRC offers update on turnaround efforts

YRC Worldwide Inc. has been consulting with turnaround firms and financial advisers to help it come up with a plan for weathering the recession.

The Overland Park-based trucking company late Wednesday offered an update about its work to position itself to ride out the economic downturn. The release followed a trading day in which YRC stock prices plunged 28 percent to a 52-week low of 89 cents, compared with a previous low of $1.20. Also Wednesday, an analyst said bankruptcy remains likely for YRC in the near to midterm.

Several months ago, YRC said, it retained financial advisers that include Tenex Capital Management, Alvarez & Marsal and Rothschild Inc. to help form a “comprehensive strategic plan to address its capital structure and liquidity needs.” As part of that, Rothschild has started preliminary talks with several parties that hold significant portions of YRC’s debt securities.

Labor agreement negotiations with the International Brotherhood of Teamsters union are continuing and “remain productive,” the release said. The talks reportedly center around YRC ending its participation in union pension plans for 14 months, which would yield about $500 million in savings.

YRC also detailed other progress it has made in recent months, including integrating its Yellow and Roadway networks into YRC to cut costs, a bank agreement amendment that let YRC use $73 million in escrow funds from asset sales to pay down its revolving credit facility and progress on agreements to defer pension fund payments using company real estate as collateral. YRC reached an agreement to defer $83 million in second-quarter pension contribution payments with the largest pension fund in June; since then, seven other funds have entered the same agreement, bringing deferral of another $11 million in payments. YRC, which contributes to 36 multiemployer pension plans, still is in talks with the remaining funds.

“We can’t control the economic environment, but we certainly can and are controlling our response to it,” YRC Chairman and CEO Bill Zollars said in the release. “Our self-help recovery plan is proactive and has the support of our stakeholders. We are taking the steps needed to manage our plan today, and position our company for success as the economy recovers.”

YRC Worldwide, Teamsters trade plans to bolster trucking company

YRC Worldwide Inc. and its union have swapped plans for helping the trucking company generate sufficient short-term cash.

The parties began talks Monday at the International Brotherhood of Teamsters’ headquarters in Washington. A Teamsters negotiating committee is reviewing YRC’s proposal, and negotiations were expected to resume Tuesday, according to an update on the Teamsters’ Web site. The union has said it is reaching out to stakeholders — such as pension funds and lenders — to address the cash issue.

The Overland Park-based trucking company which has about 49,000 employees, has been hit by a drawn-out freight recession, losing $257.4 million in the first quarter. It has integrated subsidiaries, shut down facilities, laid off workers and sold property to try to cut costs and maintain liquidity.

Early this year, Teamsters member agreed to a 10 percent wage cut and suspension of cost-of-living adjustments through 2013 in exchange for a 15 percent stake in the company. YRC also has been negotiating to defer union pension fund payments using company real estate as collateral — a move its lenders allowed — and on June 18 secured an agreement with the largest pension fund to defer $83 million in payments.

YRC Shares Fall After Trucker Defers Pension Payments

Shares of YRC Worldwide Inc. dropped as much as 21% in a volatile session Thursday after the trucker reported plans to defer pension payments in what an analyst called part of an effort to avoid bankruptcy, though YRC said bankruptcy is not something it's considering.

YRC said in a release Thursday it reached an agreement with its pension fund to defer $83 million in payments. It also amended its credit facility to allow for the deferments. As of March 31, the company said it had $1.4 billion in total debt.

Stifel Nicolaus analyst David Ross said the news isn't really unexpected as the company has been doing whatever it can to raise and conserve cash.

"It's something else they're trying to stay afloat," Ross told Dow Jones Newswires, adding that whenever a company defers pension payments and does sale leasebacks, those actions are more of a "last-ditch effort."

"They're losing a ton of business, not making any money and trying to raise cash however they can, whether through deferring pension or selling real estate and leasing it back," Ross said. "The question is how long they can do this."

Chief Executive Bill Zollars told Dow Jones Newswires that bankruptcy is "not even on our radar screen" while acknowledging the pension changes announced Thursday are a short-term fix.

"The longer-term fix, we think, has to do with legislation to get the orphans off our payroll, so to speak," Zollars said, referring to the multiemployer union pension funds to which YRC contributes.

Zollars has long objected to YRC's financial obligations under the plans, saying that about half of its contributions pay for retirees who never worked for YRC but rather worked for other companies who have gone out of business.

Earlier this month, YRC said it wouldn't seek federal bailout funds, a move it had been considering to address its pension problems. Zollars said Thursday that the talk about applying for funds was mainly a way to "start the discussion" about multiemployer pension fund changes.

Zollars added that it's difficult to predict what kind of legislation could be introduced or passed but that he believes there's potential for changes.

"We think the timing is right for addressing multiemployer plans and single employer plans out there," Zollars said, adding that the company is working with a variety of people in a "fairly comprehensive approach."

In recent trading, shares were down 14.7% to $1.85 after earlier falling as low as $1.71. Shares traded higher for a time Thursday, up as much as 7.4% to $2.33. They have lost nearly 90% of their value in the past 12 months as fears about the company's substantial debt load weigh on shares. Full Story......

YRC’s Performance Improving as Firm Cuts Costs, Zollars Say

This story appears in the May 25 print edition of Transport Topics.

YRC Worldwide Inc. has received relief from lenders who waived an earnings target for the second quarter, and company head William Zollars said the less-than-truckload carrier’s performance is improving because of several cost-cutting moves, including potential pension-payment relief from the Teamsters union.

The company acknowledged reports that the unionized less-than-truckload carrier also is considering an application for $1 billion in aid from the federal Troubled Assets Relief Program to defray pension costs that currently are a cash drain.

“We are in the process of finishing negotiations with pension funds,” said Zollars, chief executive officer. He declined to give a date when he expected those talks would conclude. YRC hopes to save cash by replacing cash pension payments, now ranging from $34 million to $45 million a month, with pledging of real estate collateral.

Zollars, who spoke May 19 at the Wolfe Research Global Transportation Conference here, said the company was making progress in recovering business diverted when its Roadway and Yellow Transportation LTL units were integrated two months ago. The company has regained three to four percentage points of the 11% business reduction attributed to concerns about the integration process, he said.

“We would expect, as we move through the second quarter, more and more business will return,” Zollars said. He said the company’s operating loss was “60-ish” million dollars in April. Full Story.........