Report suggests Teamsters to ask YRCW for further wage concessions
September 10, 2010
The International Brotherhood of Teamsters intends to ask the roughly 23,000 Teamster members of less-than-truckload transportation services provider YRC Worldwide (YRCW) to approve additional wage concessions, according to a report from the website of Teamsters for a Democratic Union.
YRCW officials declined to offer up comments to LM in an e-mail.
The report indicated that the concessions are valued at $350 million per year and would run until March 2015, adding that YRCW’s current pension concession, which is set to expire at the end of this year, is about $350 million per year.
In 2009, YRCW Teamsters took a 15 percent wage concession for a 15 percent ownership stake in the company, as well as an 18-month pension contribution freeze and a reduction in health and welfare contributions. YRCW executives said at the time this deal was inked that these measures would save the company $45 million per month through the end of 2009 and increase to roughly $50 million per month in 2010. And the 15 percent wage concession in the current contract expires in 2013, according to the TDU.
The TDU report also said that the Teamsters is calling on YRCW to not renew the contract of president and CEO Bill Zollars, as well as additional equity-for-debt deals (of which there have been roughly 20 conducted) to be negotiated with YRCW’s lenders so that banks would own more stock in exchange for reducing YRCW’s high debt load.
Stifel Nicolaus analyst David Ross wrote in a research note that getting these banks to take equity in YRCW may prove to be difficult, given YRCW’s financial condition.
YRCW’s financial condition has been closely watched by industry observers, due to the extensions leading up to the debt-for-equity exchange, as well as difficult LTL market conditions caused in large part by excess capacity, decreased fuel surcharge revenues, and pricing issues, although the LTL sector is showing some signs of improvement in the form of improved pricing and revenue gains in recent months.
In the second quarter, YRCW recorded a quarterly net loss of $9.5 million and $.01 per share, which is ahead of a net loss of $309 million and a $5.20 loss per share during the second quarter of 2009. Operational revenue at $1.12 billion was down 8.7 percent year-over-year, and total operating expenses at $1.1 billion were off by about 30 percent. Operating income for the quarter at $48.3 million was up significantly compared to a $294 million loss a year ago.
Even though these numbers were down, YRCW showed some sequential and annual gains in light of quarterly net and revenue losses.
“The [second quarter earnings] are an indication that YRCW is not losing market share anymore to competitors like they did three months ago or a year ago, which is positive,” said Satish Jindel, president of SJ Consulting. “They are also focusing on pricing rather than pushing for volume gains, and it is an important message that they needed to convey from a customer and competitor point of view as a price war hurts everyone and prevents investment into the business for YRCW.”
Going forward, if YRCW can maintain current levels in the second quarter and work successfully with the Teamsters on getting its pension payments pushed out, the company could potentially be on solid footing for the next several months, according to Jindel.
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