Yellow on Sunday night announced the company had filed Chapter 11 bankruptcy, officially putting to rest weeks, if not years, of speculation of its financial demise.
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow Chief Executive Officer Darren Hawkins said via emailed statement. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
Yellow said it plans to secure debtor-in-possession financing to support the businesses throughout the marketing and sale process, including payment of certain pre-petition wages, adding the carrier also intends to repay the CARES Act loan it received in 2020.
The No. 6 carrier on CCJ's Top 250 ranking of for-hire carriers, Yellow has been off and on the ropes financially since at least 2009, yet it had managed to narrowly avoid bankruptcy multiple times until now. It's pending closure, affecting nearly 30,000 employees, is among the largest in U.S. history with regard to headcount. The company has been in the process of winding down operations for more than a week.
The final straw turned out to be the threat of a July 24 labor strike among the carrier's roughly 22,000 International Brotherhood of Teamsters (IBT) members that drove away Yellow customers. While Hawkins lauded his employees – both union and non-union – as "the unsung heroes throughout the pandemic," he pulled no punches in laying the blame for Yellow's unceremonious end.
"All workers and employers should take note of our experience with the (IBT) and worry,” said Hawkins. “We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
Teamsters National Freight Director Teamsters John A. Murphy said union members’ loss of work at Yellow was no fault of their own, adding "they should be the first in line for real relief as bankruptcy moves forward. While Yellow’s closure represents one last shameful act by a greedy employer, the Teamsters will never desert our brothers and sisters," he said. "We will do everything we can to prioritize our members at Yellow and their families during this bankruptcy.”
Yellow at the union were at odds over a makeover of Yellow's network called One Yellow. The goal was for the company to emerge as a lean "super-regional carrier." Phase 1, integrating the linehaul networks of YRC Freight and Reddaway in the Western region to support both regional and long-haul services, was completed last year with IBT approval. However, IBT threw up a roadblock over Phases 2 and 3, which included the alignment of operations in the Northeast, Midwest, Southeast and Central regions set to take place this year.
Union members had made concessions over the last 15 years – including wage reductions and reductions in benefits – as the carrier found itself in financial distress. Yet union leadership drew a hard line in the sand over the completion of One Yellow and remained inflexible without guarantees from the carrier.
Yellow has maintained the delay in rollout has cost the company in excess of $137 million since late last year. The carrier in June filed a lawsuit against IBT to recoup the damages, and last week said the union shouldered blame for Yellow's precarious financial state.
“While IBT leaders may believe they won a battle against Yellow, it’s our employees and their families who have lost,” said Hawkins. “We tried everything to work with IBT leadership and did all we could to save employees’ jobs. We are crushed by today’s announcement, yet we are grateful to our tens of thousands of employees who took care of our customers until the end. Our employees are professionals who, despite heavy hearts, worked diligently to clear the docks, deliver remaining freight, and close our terminal doors one last time."