The transportation company Yellow Corp. is reportedly preparing for bankruptcy. Here’s what you need to know

NEW YORK (AP) — The fate of American transportation company Yellow Corp. does not look good.

After years of financial trouble, Yellow is reportedly preparing for bankruptcy and is seeing customers leave en masse, raising the risk of future liquidation. While the company has yet to announce an official decision, the prospect of bankruptcy has renewed focus on Yellow’s ongoing negotiations with union workers, a $700 million loan from the government during the pandemic, and other bills the truck driver faces over time. has made.

Formerly known as YRC Worldwide Inc., Yellow is one of the nation’s largest less-than-freight carriers. The Nashville, Tennessee-based company has some 30,000 employees nationwide.

Here’s what you need to know.


Not yet. But industry experts suspect a bankruptcy filing could come any time now.

People familiar with the case told The Wall Street Journal that the company could seek bankruptcy protection as early as this week – with some noting that a significant number of customers have already begun to leave the carrier.

Meanwhile, according to Cargo waves, employees were told to expect the filing Monday. Geel laid off an unknown number of employees on Friday, the outlet reports reported laterciting a memo stating that the company was “closing its regular operations”.

According to Satish Jindel, president of transportation and logistics company SJ Consulting, Yellow will process an average of 49,000 shipments per day by 2022. As of this week, he estimates the number has dropped to between 10,000 and 15,000 daily shipments.

With customers leaving — as well as reports that Yellow stopped picking up cargo earlier this week — a bankruptcy “would spell the end of Yellow,” Jindel told The Associated Press, noting that the risk of liquidation was higher.

“The chances of them surviving and remaining solvent are really declining by the day,” added Bruce Chan, director of research at investment bank Stifel.

Yellow media contacts did not immediately respond to Associated Press requests for comment on Friday. In a Wednesday statement to The Journal, the company said it was continuing “preparations for a series of contingencies.” On Thursday, Yellow said it was in talks with several parties about the sale of its external logistics organization.

Even if Yellow could sell its logistics company, it “would not generate enough money to keep them operational permanently,” Chan said. “Without a big injection of capital, it would be very difficult for them to survive.”


At the end of March, Yellow had outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan for national security reasons. Last month, a congressional inquiry concluded that the Treasury and Defense Departments had “made missteps” in this decision — noting that Yellow’s “precarious financial position at the time of the loan, and ongoing struggles, exposes taxpayers to significant risk at a loss.”

The government loan expires in September 2024. As of March, Yellow had made $54.8 million in interest payments and paid back only $230 million of principal owed, according to government documents.

Yellow’s current finances and the prospect of bankruptcy “are probably two decades in the making,” Chan said, pointing to poor management and strategic decisions dating back to the early 2000s. has saved so many times, there is a limited appetite left to do so.”

In May, Yellow reported a loss of $54.6 milliondown $1.06 per share, for the first quarter of 2023. Operating income was approximately $1.16 billion in the period.

A Wednesday investor note from financial services firm Stephens estimated that Yellow could burn between $9 million and $10 million each day. Using a liquidity disclosure made earlier this month, Yellow had about $100 million in cash at the end of June, the note added — estimating that the company burned more and more cash in July.

“It is reasonable to assume that the company could breach its $35 million. liquidity needs at any time,” wrote Stephens analyst Jack Atkins and contributor Grant Smith.


The reports of bankruptcy preparations come just days after a strike by the Teamsters, representing Yellow’s 22,000 union members, was averted.

A series of heated arguments have ensued between the Teamsters and Yellow, who sued the union in June after claiming it was “unjustifiably blocking” restructuring plans necessary for the company’s survival. The Teamsters called the lawsuit “baseless” — with President Sean O’Brien pointing to Yellow’s “decades of gross mismanagement,” including exhausting the $700 million federal loan.

On Sunday, a pension fund agreed to extend health benefits to employees of two Yellow Corp. operating companies. Welfare Fund on July 15, the union said. While the strike did not take place, talks of a strike may have caused some Yellow customers to pull out, Chan said.

Conversations between Yellow and the Teamsters, who also represent UPS union members, are in progress. The current contract expires in March 2024.

“Yellow’s financial problems are not related to the union and the contracts,” Jindel said, noting management’s responsibility with regard to its services and prices. He added that Yellow’s union wages are “lower than any competitor.”


If Yellow files for bankruptcy and customers continue to take their shipments to other carriers, such as FedEx or ABF Freight, prices will rise.

Yellow’s prices have historically been the cheapest compared to other carriers, Jindel said. “That’s why they clearly weren’t making any money,” he added. “And while there is capacity at the other LTL carriers to handle Yellow’s diversions, it will come at a high price for (current shippers and customers) of Yellow.”

Chan adds that we are in an interesting time for the LTL marketplace – noting that if Yellow goes out of business and liquidates, “the cargo would find a home” with other carriers, which may not have been the case in recent years used to be.

“It may take a while, but there is room to record it,” he said.

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