YRC shares skid, ABF jumps on appeals court ruling

By: | at 08:00 PM | Channel(s): Intermodal News  Logistics  

A federal appeals court has given new life to a rival’s lawsuit against top U.S. trucker YRC Worldwide Inc., jeopardizing the company’s restructuring efforts.
The U.S. Court of Appeals ruling reversed a lower court ruling and said the lawsuit brought by Arkansas Best Corp’s freight unit against YRC and its labor union, the International Brotherhood of Teamsters, could go forward.
YRC Worldwide maintains that the claims are without merit and said in a statement that it will prevail in district court. The decision will have no impact on its restructuring efforts, it said.
Arkansas Best, one of YRC’s major rivals in the U.S. trucking sector, filed suit in November 2010 claiming YRC gained an unfair advantage when it negotiated deep concessions with its labor force as part of a broad restructuring.
Arkansas Best and YRC previously were part of a multi-employer bargaining unit for negotiations with the Teamsters, but at one point Arkansas Best opted out. When it attempted to rejoin negotiations, Arkansas Best was not allowed to do so and was not able to secure concessions similar to those given to YRC.
Arkansas Best’s lawsuit asked for $750 million in damages and sought to nullify the Teamsters union labor concessions to YRC, alleging the deal between YRC and the union violated a national industry collective bargaining agreement.
With the appeals court decision, ABF said in a statement it will continue to seek that relief on remand.
Analysts said such a blow could be devastating for YRC, which has been struggling to stay afloat and which is in the final stages of securing a recapitalization.
“The biggest near-term focus is YRCW’s ability to secure financing given the overhang from the case; lack of continued support from lenders could severely compromise YRCW’s survivability,” Robert W. Baird analysts wrote in a client note.
The analysts expect YRC and the Teamsters to renew a pretrial motion to dismiss the case. A ruling on that would likely be made in the near term, while the outcome from a trial would be months away, they said.
YRC, the nation’s largest less-than-truckload carrier, said in April it had a definitive agreement for a restructuring plan to infuse capital, while handing over 97.5 percent ownership to its lenders and labor union. (Reuters)

American Journal of Transportation