YRC Worldwide Inc said its workers had agreed to extend financial concessions considered key to the company’s survival.

The agreement with the International Brotherhood of Teamsters should save YRC, the nation’s top less-than-truckload carrier, an estimated $350 million annually, according to a statement by YRC officials.

The pact, which covers wages, pension contributions and a range of other compensation issues, is “an important step in the company’s comprehensive recovery plan,” they said.

“This new labor contract positions our company for improved performance by providing a long-term market competitive cost structure as well as enhanced efficiency,” said Mike Smid, YRC chief operations officer.

The Teamsters said the agreement would save 25,000 jobs.

“As painful as the sacrifices are on an individual level, our members understood that by approving this restructuring plan they would be setting the stage for the company’s existing lenders to do their part and make this company an attractive investment for new investors and preserve their jobs,” Teamsters General President Jim Hoffa said in a statement.

The new labor contract extends the previous agreement, slated to expire in 2013, until March 31, 2015.

While the deal removes some hurdles to the company’s recovery, YRC still faces financial challenges, including a need to raise at least $300 million in additional equity by the end of the 2011 first quarter, said Deutsche Bank analyst Justin Yagerman.

Overland Park, Kansas-based YRC said in October that its operations were improving after it was nearly forced into bankruptcy last December.

News of the labor deal angered one of YRC’s top competitors, ABF Freight System Inc. ABF, the largest subsidiary of Arkansas Best Corp , said it was filing a against the Teamsters and YRC for violating a collective bargaining agreement known as the National Master Freight Agreement (NMFA), which covers most unionized trucking employees in the United States.

“It is ABF’s firm belief that the three rounds of concessions granted to YRC—with the latest deal just ratified last week ... are in violation of the NMFA,” said ABF CEO Wesley Kemp.

ABF, which has about 8,000 unionized employees, said it was seeking $750 million in damages and was seeking to have the contract amendments benefiting YRC declared null and void.

“The NMFA applies equally to every company that signed it and, quite simply, with these three amendments, it does not do that. We need a long-term, industrywide solution that is fair to all NMFA parties,” Kemp said in a statement.

The legal actions, filed administratively under the labor contract and in federal court in Arkansas, allege the Teamsters violated the NMFA in 2009 and 2010 by entering into concessionary side agreements with YRC that give “significant wage and benefit reductions and other economic concessions” only to YRC and not to its rivals. (Reuters)