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By Angela Greiling Keane
Bloomberg News
POSTED: 09:06 p.m. EST, Dec 04, 2008
YRC Worldwide Inc., the largest U.S. trucker with Roadway operations based in Akron, said Thursday it will seek out more cost reductions after reaching a tentative agreement with the Teamsters union for a 10 percent wage cut.
''YRC under President-elect Barack Obama's administration will push to allow the multi-employer pension plan it participates in to stop supporting retirees from companies that have gone out of business,'' chief executive officer Bill Zollars said.
''There are going to continue to be efforts to create as much cushion for this economic downturn as possible,'' Zollars said. ''We're still working on some plans to share the pain across the entire company.''
YRC is scaling back after posting losses in three of the past four quarters as the U.S. recession extends a freight slump dating to 2006. The Overland Park, Kan.-based company said Wednesday that the accord with the Teamsters, which faces a vote by about 40,000 union members, would help save as much as $250 million a year.
Standard & Poor's on Thursday lowered its corporate credit rating for YRC by five grades to ''CC,'' or 10 steps below investment status, from ''B.''
S&P cited the company's $100 million tender offer for some of its notes, calling it a distressed debt exchange. YRC announced the offer Nov. 25.
YRC shares rose 53 cents, or 11 percent, to $5.37. The daily gain was the shares' ninth in a row since Nov. 20, when they fell to their lowest close since at least 1982.
The union concessions are good for the stock and debt in the short to intermediate term, said Thom Albrecht, a Stephens Inc. analyst in Glen Allen, Va., in a note to investors. He rates YRC shares equal weight.
Albrecht said the union givebacks might not change the earnings outlook and might lower employee morale. Some other companies that, like YRC, carry freight for multiple customers in each trailer have cut wages and subsequently gone out of business, he said.
YRC's size and proactive efforts in addressing cost and balance sheet issues give it better survival odds than predecessors, Albrecht said.
YRC is the largest member of the Central States Fund, a multi-employer pension plan, with about 30 percent of the liability, Zollars said.
YRC, which is integrating its Yellow and Roadway national trucking brands, wants to further reduce costs as freight volumes this quarter are less than a year earlier, Zollars said.
''It's not clear where the bottom is in this recession,'' he said.
YRC Worldwide Inc., the largest U.S. trucker with Roadway operations based in Akron, said Thursday it will seek out more cost reductions after reaching a tentative agreement with the Teamsters union for a 10 percent wage cut.
''YRC under President-elect Barack Obama's administration will push to allow the multi-employer pension plan it participates in to stop supporting retirees from companies that have gone out of business,'' chief executive officer Bill Zollars said.
''There are going to continue to be efforts to create as much cushion for this economic downturn as possible,'' Zollars said. ''We're still working on some plans to share the pain across the entire company.''
YRC is scaling back after posting losses in three of the past four quarters as the U.S. recession extends a freight slump dating to 2006. The Overland Park, Kan.-based company said Wednesday that the accord with the Teamsters, which faces a vote by about 40,000 union members, would help save as much as $250 million a year.
Standard & Poor's on Thursday lowered its corporate credit rating for YRC by five grades to ''CC,'' or 10 steps below investment status, from ''B.''
S&P cited the company's $100 million tender offer for some of its notes, calling it a distressed debt exchange. YRC announced the offer Nov. 25.
YRC shares rose 53 cents, or 11 percent, to $5.37. The daily gain was the shares' ninth in a row since Nov. 20, when they fell to their lowest close since at least 1982.
The union concessions are good for the stock and debt in the short to intermediate term, said Thom Albrecht, a Stephens Inc. analyst in Glen Allen, Va., in a note to investors. He rates YRC shares equal weight.
Albrecht said the union givebacks might not change the earnings outlook and might lower employee morale. Some other companies that, like YRC, carry freight for multiple customers in each trailer have cut wages and subsequently gone out of business, he said.
YRC's size and proactive efforts in addressing cost and balance sheet issues give it better survival odds than predecessors, Albrecht said.
YRC is the largest member of the Central States Fund, a multi-employer pension plan, with about 30 percent of the liability, Zollars said.
YRC, which is integrating its Yellow and Roadway national trucking brands, wants to further reduce costs as freight volumes this quarter are less than a year earlier, Zollars said.
''It's not clear where the bottom is in this recession,'' he said.
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