Employees of Covenant Transport told The Chattanooga (Tenn.) News on Wednesday, Oct. 4, that the locally based firm laid off between 150 and 200 people on Friday, Sept. 29, and that another layoff may in the offing. The layoffs reportedly were at Covenant’s headquarters and terminals throughout the country.
The news comes three weeks after Covenant announced its acquisition of 100 percent of the outstanding stock of Star Transportation of Nashville, Tenn., for about $40 million in cash. “For the past year, our management team has been internally focused, as we have implemented a business realignment and attempted to improve the operating results of each of our service offerings,” David R. Parker, Covenant chairman, president and chief executive officer, said on Sept. 14 when the Star purchase was announced. “Covenant is strongly committed to a significant regional presence because of the large freight volumes that move in regional lanes.”
Covenant reported net losses in its most recent quarterly financial statements, but Parker said the addition of Star to Covenant’s corporate group would allow it to jump-start the turnaround of its regional service offering. “As these changes are implemented over the next several months, we expect to see a combined regional operation larger in size than Covenant operated alone during the second quarter of 2006, but with about 450 unprofitable trucks removed from Covenant’s fleet and the addition of Star’s approximately 600 quite profitable trucks,” he said when announcing the Star acquisition.
