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Since 2021, the struggling brand has implemented a cost-cutting plan that executives hoped would put the business back on track.
The company's circumstances have become all the more dire as shipping demand across the freight sector declined substantially this year.
Last week, Yellow, which had $5.2 billion in revenue last year, narrowly avoided a driver strike by Teamster union members after failing to make a $50 million payment for employee benefits. The company had a 30-day period to catch up on pension and benefits payments.
The Teamsters blamed the executives for poor management.
'Teamsters have kept this company afloat for more than a decade through billions of dollars in wage, pension and work-rule concessions,' a union spokesman said.
'Yellow couldn't manage itself, and it wasn't up to Teamsters to do it for them.'
Stan Koniszewski, a union leader for Teamsters Local 294, said it was 'a sad day in the freight industry.'
He said the union 'will be there with whatever support we can give', helping them file unemployment claims and trying to find them new jobs.
'Whatever we do, we will do together as a family - a strong 294 family,' he said.
In a memo sent out on Friday, Teamsters told local unions that 'likelihood that Yellow will survive is increasingly bleak.'
They urged employees to gather their personal things and prepare for the worst.
In Friday's memo to staff, Yellow wrote: 'The company is shutting down its regular operations on July 28, 2023, closing and/or laying off employees at all of its locations, including yours.'
On Sunday, Yellow blamed the union for its intransience.
A spokeswoman for Yellow said it had not asked the union for concessions in its recent restructuring.
'Yellow offered to pay its employees more,' she said. The union 'refused to negotiate for nine months.'
Last week, a company official told the New York Times that the company was preparing for 'a range of contingencies.' By Friday, a company spokesperson would not tell the Times anything more.
Yellow is saddled with some $1.5 billion in debt as of late March, including $729.2 million owed to the federal government for a controversial pandemic-era loan the Treasury Department extended on national security grounds in 2020.
A June 2023 congressional report concluded the Treasury Department dodged its own policies to issue the loan and the previous administration had made a mistake in doing so.
In May, Yellow reported a loss of $54.6 million, a decline of $1.06 per share, for its first quarter of 2023. Operating revenue was about $1.16 billion in the period.
An investors note from financial service firm Stephens last week estimated that Yellow could be burning between $9 million and $10 million each day.
Yellow was saddled with some $1.5 billion in debt as of late March, including $729.2 million owed to the federal government for a controversial pandemic-era loan the Treasury Department extended on national security grounds in 2020
Using a liquidity disclosure from earlier this month, Yellow had roughly $100 million in cash at the end of June, the note added - estimating that the company has been burning through increasing amounts of money through July.
'It is reasonable to believe that the company could breach its $35 mil. liquidity requirement at any moment,' Stephens analyst Jack Atkins and associate Grant Smith wrote.
The reports of bankruptcy preparations arrive just days after a strike from the Teamsters, which represents Yellow's 22,000 unionized workers, was averted.
A series of heated exchanges have built up between the Teamsters and Yellow, who sued the union in June after alleging it was 'unjustifiably blocking' restructuring plans needed for the company's survival.
The Teamsters called the litigation 'baseless' - with general president Sean O'Brien pointing to Yellow's 'decades of gross mismanagement,' which included exhausting the $700 million federal loan.
On July 23, a pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, averting a strike - and giving Yellow '30 days to pay its bills,' notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15, the union stated.
While the strike didn't occur, talks of a walkout may have caused some Yellow customers to pull back, Chan said.
If Yellow files for bankruptcy and customers continue to take their shipments to other carriers, like FedEx or ABF Freight, prices will go up.
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