A delinquency notice was issued Monday showing less-than-truckload carrier Yellow Corp. failed to make required contributions to health and welfare and pension funds for the month of June and that it is planning to withhold payments for July. The two periods total more than $50 million, according to a letter from Central States board of trustees.
Teamsters at Yellow (NASDAQ: YELL) operating companies YRC Freight and Holland that are covered under plans managed by Central States will be impacted.
The letter said health care claims incurred after Saturday would not be paid unless employees choose to “remit self-payments.” The company’s participation in the pension plan would be terminated effective Sunday if payment is not made, meaning no further accruals of pension benefits.
The letter showed Yellow was making the move “to avoid running out of cash.”
“If in the future Yellow fully pays the required contributions, pension benefits and health coverage will be reinstated retroactive to July 23, 2023,” the letter read.
A separate letter from John Murphy, co-chair of the Teamsters negotiating committee, to local unions invoked a more dire tone. In the notice he cited language from the collective bargaining agreement, outlining a potential work stoppage.
“In the event an Employer is delinquent in its health & welfare or pension payments in the manner required by the applicable Supplemental Agreement, the Local Union shall have the right to take whatever action it deems necessary until such delinquent payments are made.”
The document referenced the union’s requirement to give an employer 72 hours’ notice of a strike authorization. Murphy advised the local unions to send notice to YRC Freight and Holland demanding payment by Friday or risk a work stoppage on or after July 24.
Yellow previously asked the funds for contribution deferrals for the months of July and August, but the company never indicated whether or not those requests had been approved.
Roughly half of Yellow’s Teamster employees are covered by Central States.
Last week, Yellow was granted a covenant waiver from lenders. The company’s lending agreements require it to maintain a level of $200 million in earnings before interest, taxes, depreciation and amortization for the prior 12 months. Yellow had generated just $89 million in the fourth and first quarters.
That filing also showed the company had in excess of $100 million in cash and equivalents as of June 30.
“Even if these payments are cured, it would significantly reduce the company’s cash balance,” Deutsche Bank (NYSE: DB) analyst Amit Mehrotra told clients in an email late Monday evening. “This is perhaps the most tangible example of why we think it’s more likely than not YELL will go out of business, as we’ve said before.”
“We are aware of the decision of Central States Health Fund and Pension Funds to decline our request to defer contributions (with interest) for July and August,” a spokesperson with Yellow told FreightWaves. “We regret that the funds have rejected our request.
“Even today, we remain committed to negotiating a new contract with the IBT [International Brotherhood of Teamsters], which would provide everyone, especially our employees, with a clear path forward. We are not giving up. We will work with all parties involved to come to a speedy resolution.”
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Phil Latour
I retired Roadway 1997, both carriers Yellow and Roadway operating ratios were low, Roadway accasually would fall into the red but manage to recover. The merger of both these carriers never work out, but the union should do everything they can to save them. Big mouth Sean Obrien should do everything he can to keep YRC on the road. After deregulation I saw 138 trucking companies shut down, thousands of union jobs lost, and the union did nothing. If YRC goes down, there will be no National Contracts, most Union Carriers will operate without a contract, because the Teamsters Union will be powerless to bargain.
Rob E
I left Yeller (Reddaway) last October. I saw the writing on the wall and got out. It’s been circling the drain since they started to fully intergrate.
corky miller
holland and new penn where good money makers now that they consolidated them everything gos under what a shame.
R S Pardue
Yellow/Roadway has been dying a slow death for 20 plus years. Most LTL union carriers failed to adapt after deregulation. Time to let it go.
Norm S.
22,000 people are going to lose their jobs on Monday. Sean’s going to show off for the news and we’re all going to lose our houses!
Jimmy Winn
At this point I don’t think a strike would be helpful but I don’t know what else the members and Union can do other than roll over, not a good situation IMO!
Steve Needs
Put freight on trailers
Hire companies that utilize contractors. Avoid any costs i.e. health, retirement, vacations, uniforms, and especially costly lawsuits involving crashes. Nobody makes money, so no taxes are collected. Contracted drivers still use public services, i.e. police, fire, schools, and free use of highways. Contracted drivers get full benefit of every government welfare programs. Open up the borders so there will never be an end and send everything overseas to be built. Oh, and shut off our gas and oil production as well.
Steve Needs
Today companies are specializing in the bankruptcy business
There was never consideration given to making profits. Put together massive numbers, sell stock, get out quickly and do it again, for the 5th or 6th time