YRC CFO Jamie Pierson told Bloomberg that he did not expect to see negotiations completed before a Nov. 15 goal the company set when officials met with leaders of the Teamsters Nov. 5 in Dallas. YRC officials have said a deal must be completed soon in order for the Overland Park-based trucking company (Nasdaq: YRCW) to refinance before its debts begin to come due in February.
YRC formally acknowledged it is in “discussions” with the labor union that represents more than 25,000 of the company’s 32,000 employees but has not commented further on the situation. CEO James Welch did not take analysts’ questions on the subject during the company's quarterly earnings conference call.
Representatives of the Teamsters’ national office in Washington have also declined to comment on the negotiations.
YRC is seeking an extension or an amendment to its current contract with the Teamsters. The two parties current contract runs through March 2015. YRC has told the union it needs to extend the life of that contract into 2019. The company says an agreement is necessary for it to pay $1.4 billion in debts that were incurred under the watch of former CEO Bill Zollars which will come due in 2014 and 2015.
The existing labor agreement is based on three rounds of concessions the company and the union agreed on between 2008 and 2010. In those concessions, the union consented to a 15 percent cut in wages, suspension of pension payments and reduced vacation time for members. YRC began to make pension payments again in early 2012 at 25 percent of the rate paid in 2009.
The deal saves YRC an estimated $350 million in labor costs annually. It also gave the Teamster employees stock in the company and granted the labor union the right to nominate two members to the YRC board.