YRC Worldwide's reported request for $1 billion from the federal bailout fund is sending shock waves across the trucking world.
YRC is the first and so far only trucking operator to apply for assistance from the Troubled Asset Relief Program. TARP was set up last year to support failing banks but also has loaned billions of dollars to auto companies and insurance giant American International Group.
YRC, nearly a $9 billion company, is seeking only a fraction of the $110 billion estimated to be left in the TARP fund. The company, which reported a $257.4 million loss in the first quarter, needs the money to help meet its multiemployer pension plan obligations, Chairman, President and CEO William D. Zollars told The Wall Street Journal.
Zollars told the Journal he wants to start a "conversation" about multiemployer pension contributions. Like other companies that contribute to such plans, YRC says it is paying for the pensions of many retirees who never worked for the Overland Park, Kan.-based company and its carriers.
Trucking analyst David G. Ross of Stifel Nicolaus says it's unlikely YRC will receive TARP funding from the U.S. Treasury. "This is just another indication of them trying anything they can to get help, to raise money, to get cash."
What's your opinion — should financially ailing YRC or other trucking companies receive taxpayer funds through TARP? What are the risks if a company as large as YRC — which still has the lion's share of the LTL freight market — were to go out of business? Send us your comments.