Effective immediately, the new contract includes a 15 percent pay cut from the full National Master Freight Agreement, an 18-month termination in pension contributions and a reduction in health and welfare contributions.
The cutbacks, which are part of a company-wide plan to restore the less-than-truckload giant's financial health, will save YRC $1.2 billion over the remaining 44-month term of the agreement.
"With the support of our employee-owners and other stakeholders, we continue making progress with our comprehensive recovery plan - realizing efficiencies from the YRC integration, restoring financial strength and positioning YRC Worldwide for future success," said Bill Zollars, Chairman, president and CEO of YRC Worldwide. "The contract changes enable us to reduce our cost structure, preserve capital and be more competitive in the marketplace."
As part of the agreement, the union will be given an appointee on YRC's board of directors as well as a corporate restructuring advisor at the company. Members will also receive stock options for 20 percent of the outstanding shares of YRC stock.
The wage reduction and pension terminations will not remain in effect unless the company amends its loan agreements to provide enough liquidity and flexibility to complete its restructuring and take advantage of the upturn in freight demand anticipated in 2010, and affiliated Teamster Pension Funds approve the "deferral/termination" arrangement.
"Once again Teamster members at YRCW have shown great courage by making extraordinary sacrifices to help this company survive," said Jim Hoffa, Teamsters general president.
However, Teamsters officials say it's now time for other stakeholders to do their part to ensure YRC's long-term survival, including the banks.
YRC also announced progress on improving its liquidity position by executing contracts with NorthAmerican Terminals Management Inc. to sell and simultaneously lease back certain facilities, and to sell additional excess properties. Sale and financing leaseback transactions are now expected to generate around $375 million of cash proceeds and excess property sales should generate over $100 million in 2009.