Wednesday, February 24, 2010

‘Yellow’ Moves Into the Black

YRC’s moves let it ‘remain a going concern,’ say financial analysts

For less-than-truckload (LTL) shippers, the ongoing travails of YRC Worldwide, the country’s largest trucking firm, have loomed large in the past year.

Now, with a debt-for-equity swap approved by the company’s shareholders last week, YRC has gained breathing room, and taken a giant step on the “roadway” back to profits and viability.

The move eliminated $550 million in debt from the giant carrier’s books, and gave 94 percent of YRC’s stock to its former bondholders, while securing long-term lending and labor deals. The company now has $343 million in liquidity, including $98 million in cash.

This is big news for YRC’s customers, and indeed for all LTL shippers, as losing the largest player in the industry, at a time when there is already upward pressure on freight rates, would have had a major reverse-domino effect, emboldening all remaining carriers to hike prices further and drop less-profitable accounts.

YRC chairman and CEO William Zollars predicted “positive cash flow” and a return to profitability as early as the second quarter of 2010, noting improved shipping trends in January and now February in a recent conference call with investment analysts. A major concern for YRC is winning back shippers lost during many months of uncertainty concerning the company’s future, reported the Journal of Commerce.

With no shortage of bad news, the good news from YRC is a solid positive for LTL shippers.


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