YRC, Teamsters reach tentative deal on concessions after more than a week of negotiations

YRC, Teamsters reach tentative deal on concessions

NEW YORK — Debt-laden trucking company YRC Worldwide Inc. and the Teamsters Union said Thursday they have reached a tentative deal on concessions they say will address the company’s immediate need for cash while protecting union jobs.

But while an agreement with the Teamsters is a big step in the company’s push to stave off bankruptcy, analysts say the company still has some changes to make in its effort to stay afloat.

The announcement drove shares of Overland Park, Kan.-based YRC up by more than double, trading as high as $1.95 in the morning.

Neither side provided details. The Teamsters said specifics of the deal will be made available to union members next week. It will then go to a vote.

The Teamsters say the contract calls for “equal sacrifice” from workers and the company — a key sticking point for the Teamsters who had expressed concern in early negotiations over certain points they said would affect them and not the company. For instance, a widely reported negotiation point was that YRC was asking to stop its pension contributions for 14 months — estimated to save about $500 million. But workers wouldn’t have received anything in return.

“This is a tough situation for the company and our members,” Teamsters Freight Division Director Tyson Johnson said in a statement. “We are confident this Tentative Agreement balances the need to provide job security while maintaining good quality jobs.”

The Teamsters have once before opened their contract and agreed to concessions to save their jobs at YRC, which runs trucks under names including Yellow and Roadway. The approximately 35,000 union members agreed to a 10 percent pay cut in January in exchange for a 15 percent stake in the company. But as the economy remained weak and freight demand sputtered, it soon became clear that more sacrifices were needed.

“We appreciate the ongoing willingness of the Teamsters leadership to work with the company to identify ways to improve the financial position of YRC Worldwide during this severe economic recession,” YRC Worldwide Chief Operations Officer Mike Smid said in a statement.

Besides firing thousands of workers and asking remaining ones to take steep pay cuts, the trucking company has taken other steps to hold on to cash. It has sold a number of its properties — including its corporate headquarters — to preserve liquidity. It has also made deals with its creditors to stay within the terms of its debt obligations.

In a statement late Wednesday, the company said it has retained advisers from Tenex Capital Management, Alvarez and Marsal and Rothschild Inc. to help it address its capital structure and liquidity needs.

YRC said Rothschild has started preliminary talks with major debt holders. Tenex is advising the company, one of the nation’s biggest truckers, on cost cuts and changes to streamline its operations.

“We can’t control the economic environment, but we certainly can and are controlling our response to it,” President and CEO Bill Zollars said in the statement. “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.”

In a note to clients, Stifel Nicolaus analyst David Ross said he believes that if the company does make it to next year, it will most likely be through some form of bankruptcy restructuring. He said the company’s operation is still too expensive, while demand is still declining. Other Wall Street analysts still expect an eventual bankruptcy filing as well.

YRC shares advanced 88 cents , or 99 percent, to $1.77 in afternoon trading.