Dive Brief:
- The International Brotherhood of Teamsters issued a strike notice at Yellow Corp. Tuesday, warning 22,000 unionized workers would walk off the job if the third-largest U.S. LTL carrier does not make its overdue payments to their benefits and pension plans.
- A work stoppage could begin as soon as Sunday if the LTL carrier does not pay the $50 million it owed July 15 to the Central States Health and Welfare Fund and Pension Fund, the union said.
- The strike threat puts additional pressure on the troubled trucking giant, which resorted to suing the Teamsters last month for delaying its proposed network overhaul as it teeters on the brink of bankruptcy.
Dive Insight:
A strike would be a worst-case scenario for the company, which has been sparring with the Teamsters for months over its One Yellow network overhaul.
“We believe it would be extremely difficult for Yellow to recover from a full-blown strike given its precarious financial status,” TD Cowen analysts wrote in a financial note Tuesday.
The Central States Pension and Health Fund said it had been advised by Yellow that the company would also miss its Aug. 15 payments. The Central States Board of Trustees voted Monday to suspend health care benefits and cease pension accruals following the missed payments by its subsidiaries Holland and Yellow Freight.
Yellow asked the pension funds not to interrupt coverage for its employees because of the deferred contributions, the carrier said in a statement Tuesday.
Yellow intends to repay the funds with interest “immediately upon securing additional financing and has asked the funds to discuss acceptable terms,” the company said.
“We are not giving up,” Yellow said. “We will work with all parties involved to come to a speedy resolution.”
Yellow disclosed a cash balance of $154.7 million in March, which indicates the benefits and pension plan payments would require a sizable amount of its liquidity, TD Cowen said. The carrier got a reprieve this month from its lenders to stave off bankruptcy.
The carrier must make the $50 million in benefits and pension contributions by Sunday to avoid interruption in benefits, and the union said it would strike Monday if the payments are not made.
“Yellow has a responsibility and obligation to workers,” Teamsters General Secretary and Treasurer Fred Zuckerman said in a statement. “This is a new low.”
