LTL carrier Yellow Freight, not long ago known as YRC Worldwide, avoided what it said would be a fatal blow when the Teamsters delayed for now a strike action against the company.
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The heart of the issue is Yellow’s desire to fully integrate various LTL carriers it has acquired over the years as a single network, which would drive efficiencies.
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Yellow and YRC before it have been financially troubled for years, much of which stems from the enormous debt the company took on to make a series of acquisitions of other LTL carriers.
Yellow currently has some $1.3 billion in debt it is trying to refinance, including a massive $700 million and controversial loan from the federal government that came from COVID stimulus funds. The debt is mostly due in 2024.
That loan from the stimulus funds left the US government as a 30% owner of the carrier. It came as Yellow was named an essential enterprise, as it does a lot of freight carriage for the Department of Defense.
Yellow is the third largest US LTL carrier. It employs about 30,000 workers, including roughly 22,000 union members, mostly drivers and freight terminal workers.
Lacking in cash, Yellow missed a payment last week to a pension fund that provides health benefits to Teamsters union members at the carrier. That led to a call from some union leaders for a strike.
The union said Sunday that it was delaying its plans for walkout, which could have commenced as soon as Monday, after the pension fund agreed to continue to extend health benefits to unionized workers at Yellow and a sister company and would give Yellow another 30 days to make its payment.
Late last week, a federal judge in Kansas City rejected Yellow’s request for an order blocking a strike, after Yellow had said a strike would send the business into liquidation.
Yellow has been warning it is running out of cash for months and was at risk of bankruptcy, saying that could happen as early as August. It has hired an investment banking firm to help find a way to refinance its debt. The carrier has said getting the debt refinanced is connected to its success in getting the contract changes with the union.
The federal government has waived requirements that the company maintain certain financial targets through this year’s financial quarter that ended June 30. Other lenders, including Apollo Global Management, have similarly waived the financial requirements through Sept. 30 this year, according to Yellow’s SEC filings.
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 The Teamsters are holding fast about allowing the operational changes Yellow is demanding. The heart of the issue is Yellow’s desire to fully integrate various LTL carriers it has acquired over the years as a single network, which would drive efficiencies.
“It is not left for the Teamsters to save this company; we have given enough,” Teamsters General President Sean O’Brien said in a June 12 video statement. “What happens next is out of our control.”
Twelve days later, O’Brien tweeted a picture of a gravestone, marked “Yellow, 1924 to 2023.”
Yellow’s stock price has followed risk of the bankruptcy filing. It ended the day Monday at $1.36 a share, up from a low of about 66 cents per share in early July, but down from a 52-week high of about $7.30 in August of 2022.
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