Dive Brief:
- The International Brotherhood of Teamsters on Sunday said it had averted a strike at Yellow Corp. after negotiating an extension on a critical payment deadline.
- The union said it had secured an agreement from the Central States Health and Welfare Fund to grant the troubled LTL giant another 30 days to make $50 million in pension and benefit payments. The 11th-hour deal means 22,000 Teamsters members at Yellow won’t walk off the job on Monday, as they had previously threatened.
- The averted strike gives Yellow some breathing room after the company had warned a strike would put it out of business. But TD Cowen analysts noted Sunday that Yellow “is hardly out of the woods, and bankruptcy may still be likely.”
Dive Insight:
The deal might have accomplished even more than temporarily averting the strike and the bankruptcy.
After a nine-month impasse over proposals in the carrier’s One Yellow network overhaul, Yellow and the Teamsters are reportedly returning to the negotiating table, TD Cowen said in its financial note.
“We note that these are likely to be strained discussions,” the analysts wrote.
In the deal, the Central States Board of Trustees overturned its decision last week to suspend healthcare benefits and cease pension accruals as of Sunday if Yellow subsidiaries Holland and YRC Freight did not make $50 million in payments due in July and August.
Yellow, which had requested deferrals and asked the funds not to interrupt employees’ coverage, said last week it intends to repay the funds with interest. A Yellow spokesperson declined to comment on the deal Sunday night.
The Teamsters said the deal providing the company another 30 days to make the payments is based on “the understanding the company will do so in the next two weeks.”
“Our members at YRC Freight and Holland cannot work without health care, and the Teamsters worked tirelessly to ensure an immediate strike at Yellow could be averted,” Teamsters General President Sean O’Brien said.
“These discussions were not easy, but Central States has made meaningful movement under pressure from the union,” he added. “We are seeking a real resolution, but let this solution today serve as a profound reminder that our members can only endure so many sacrifices. Teamsters at Yellow simply work too hard and have already given so much.”
Cowen reported that freight diversions from Yellow’s network began at a modest pace in early June as concerns about the company emerged and “intensified significantly” last week following the delinquency.
“We expect the LTL sector to be under pressure tomorrow,” the analysts wrote.
