YRC Worldwide Teamsters members OK pay cut

YRC Worldwide Inc. employees who belong to the International Brotherhood of Teamsters approved an amended labor agreement that includes a 10 percent wage cut and suspension of cost-of-living adjustments. The move is seen as vital to the trucking company???s financial health.

Overland Park-based YRC (Nasdaq: YRCW) announced results of voting by its 40,000 Teamsters employees late Thursday. YRC???s stock closed on Friday at $4.96, up 28 cents, or 6 percent, on volume of 4.6 million shares, according to Yahoo Finance. The stock???s 52-week high is $22.52, and its 52-week low is $1.20. The stock???s average daily volume the past three months is 2.5 million shares.

CEO Bill Zollars lauded the result in a release.

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???During a time of economic hardship, we are proud of the understanding and support of our employees,??? Zollars said. ???The amended contract will provide our company with significant annual cost reductions that will also have long-term benefits as the economy recovers.???

The amended contract applies to union workers in YRC???s Yellow Transportation, Roadway, Holland and New Penn business units. In exchange for the wage cut and suspension of cost-of-living adjustments, Teamsters employees will get a 15 percent ownership stake in YRC. Contributions to the health, welfare and pension plans will continue as previously negotiated, YRC said in a release.

Nonunion employees will see similar or greater reductions in total compensation, including changes made last year to nonunion workers??? retirement and benefit programs. Nonunion employees also have options to buy as much as a 7 percent ownership stake in the company.

Senior executives will reduce total compensation and won???t be eligible to participate in the stock option program.

YRC said it expects to achieve $220 million to $250 million in annual savings from the amended contract during the contract???s remaining term, in addition to $75 million to $85 million in savings in 2009 from the nonunion compensation reductions that were effective Jan. 1. The company also expects to improve 2009 operating income by a run rate of $200 million from the integration of the Yellow Transportation and Roadway networks, which it expects to complete early in the spring.

???This agreement is another critical step in our wide-ranging plan to strengthen our balance sheet, while enhancing service for our customers through our national integration of Yellow and Roadway,??? Zollars said in a release. ???With this wage reduction and our other planned cost savings, we are confident that we can sustain our liquidity position and meet our debt obligations, despite the economic downturn, upon completion of negotiations on an amendment to our credit facilities.???

Those negotiations with its bank group, and the company???s sudden stop of a debt tender offer, prompted Standard & Poor???son Wednesday to change the implicationsof its CreditWatch review of YRC to ???developing??? from ???negative.???

S&P had lowered its ratings on YRC on Dec. 4 and put them on CreditWatch with negative implications after the company announced a ???distressed tender offer,??? S&P said.

On Dec. 24, YRC stopped its offer to buy back $150 million in senior debt that was contingent on union workers ratifying the wage reduction.

A YRC spokeswoman said Wednesday that the Yellow-Roadway consolidation will reduce the number of facilities from 600 to about 450 by year???s end and reduce the employee count at affected facilities by an estimated 15 percent, although she didn???t have an estimated count of employees who will be laid off.

Customers whose access was restricted to Yellow Transportation or Roadway will have access to all the consolidated facilities. The consolidation also will add about 21,000 additional direct service points, she said, meaning that number of additional routes will start at one point and go straight to the destination, without intermediate stops, improving transportation time and efficiency.

YRC ranks No. 2 on the Kansas City Business Journal ???s list of area public companies.