A few years ago, YRC Worldwide was able to stay afloat with the help of union workers agreeing to a series of wage and benefit cuts. YRC's back in the same boat, but this time around, lenders are insisting on changes.
Ahead of a meeting with representatives of the Teamsters Union on Tuesday in Dallas, CEO James Welch said in a letter, “Our lenders have made it clear the combined company needs to be performing better than it is today, and that we need a labor agreement with our Teamster employees that extends beyond our current expiration and any new debt maturities, and increases our competitiveness, before any refinancing can be completed.”
Welch blamed the situation on YRC’s previous management team, which he says left the company with more than $1 billion in debt. YRC owes lenders $400 million in 2014 and $685 million in 2015. It has also been several years since YRC Worldwide has reported an annual profit.
While Welch did not lay out specific concessions he hopes to receive from the union, YRC’s contract with the Teamsters isn’t up until March of 2015. The current labor pact was negotiated in 2010, when the Teamsters agreed to a 15% wage cut. In 2009 and 2011, YRC had to rework its finances to avoid bankruptcy.
YRC has about 32,000 workers who are represented by the Teamsters. YRC is the parent of several carriers, including YRC Freight.
The company is set to release its third-quarter earnings statement later this week.