NEW YORK (AP) 鈥� Trucking company after years of financial struggles and growing debt, marking a significant shift for the U.S. transportation industry and shippers nationwide.
The Chapter 11 bankruptcy, which was filed Sunday, comes just three years after Yellow received $700 million in pandemic-era loans from the federal government. But the company was in financial trouble long before that 鈥� with industry analysts pointing to poor management and strategic decisions dating back decades.
Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say 鈥� noting Yellow historically offered the cheapest price points in the industry.
鈥淚t is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,鈥� CEO Darren Hawkins said in a news release late Sunday. 鈥淔or generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.鈥�
Yellow, formerly known as YRC Worldwide Inc., is one of the nation鈥檚 largest less-than-truckload carriers. The Nashville, Tennessee-based company had 30,000 employees across the country.
The Teamsters, which represented Yellow鈥檚 22,000 unionized workers, said last week that in late July following layoffs of hundreds of nonunion employees.
The and reported in late July that the bankruptcy was coming 鈥� noting that customers had already started to leave the carrier in large numbers and that the company had stopped freight pickups.
Those reports arrived just days after Yellow averted a strike from the Teamsters amid heated contract negotiations. A pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout 鈥� and giving Yellow 鈥�30 days to pay its bills,鈥� notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.
Yellow blamed the nine-month talks for the demise of the company, saying it was unable to institute a new business plan to modernize operations and make it more competitive during that time.
The company said it has asked the U.S. Bankruptcy Court in Delaware for permission to make payments, including for employee wages and benefits, taxes and certain vendors essential to its businesses.
Yellow has racked up hefty bills over the years. As of late March, Yellow had an 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 on national security grounds.
A congressional probe recently concluded that the Treasury and Defense departments 鈥渕ade missteps鈥� in the decision and noted that Yellow鈥檚 鈥減recarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.鈥�
The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.
The financial chaos at Yellow 鈥渋s probably two decades in the making,鈥� said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. 鈥淎t this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.鈥�
The Associated Press
