YRC Worldwide CEO Indicates Co. May Counter Sue ABF Freight.
By Bob Sechler, Of DOW JONES NEWSWIRES
YRC Worldwide Inc. (YRCW) Chief Executive Bill Zollars called a legal challenge to the struggling trucking company's critical new labor concessions meritless on Friday, saying YRC likely will counter sue in the case.
ABF Freight System Inc., the largest subsidiary of YRC Worldwide rival Arkansas Best Corp. (ABFS), filed a lawsuit this week against YRC and the International Brotherhood of Teamsters. ABF contends YRC's latest union concessions, as well as two previous rounds of concessions, violate the collective bargaining agreement governing the bulk of employees at unionized U.S. trucking companies, tilting the playing field in YRC's favor in terms of costs.
"There's a very high likelihood" that YRC will sue ABF Freight as part of its response, Zollars said in an interview. "We think the suit is completely without merit, and we're approaching it on that basis as we defend ourselves here."
YRC said ABF isn't a party to YRC's labor contract and the suit "is in direct contradiction to laws governing labor contracts." The Teamsters have called the complaint frivolous.
Zollars downplayed the prospect that ABF's complaint could become a significant new obstacle in YRC's recovery effort.
YRC, struggling under a heavy debt load, has said the latest concessions will save it $350 million annually.
"We're talking to our lenders, and they understand the situation" and are supportive, Zollars said, although he added that it's unclear how long it will take for the issue to play out.
YRC shares were off 54 cents, or 11.3%, in recent trading, at $4.22, after the company reported a third-quarter loss that slightly exceeded Wall Street expectations. As of Thursday's close, the stock has fallen 77% this year on a split-adjusted basis.
Meanwhile, Zollars said the company's search for his replacement is focusing primarily on outside candidates. Zollars announced in September that he plans to retire, although he said he will stay until YRC's recovery plan is in place.
"We have a few things to get done here before a new CEO steps in," Zollars said Friday. He said it's "hard to tell" at this point if he will remain past Dec. 31.
-By Bob Sechler, Dow Jones Newswires; 512-258-1690; bob.sechler@dowjones.co
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