YRC shares soar as investors eye survival efforts

OVERLAND PARK, Kansas (Reuters) - Shares in YRC Worldwide Inc (YRCW.O) shot higher on Wednesday, rallying more than 28 percent as speculation continued over the survival of the struggling freight carrier.

Some analysts said short-covering was one factor in making YRC one of Wednesday's biggest percentage gainers on the Nasdaq as the company continued to defy industry chatter of impending collapse, after having gained concessions from workers and covenant waivers from lenders in recent weeks.

"We think there is still pretty good probability that the company is able to survive the current downturn," said Longbow Research analyst Lee Klaskow. "We do believe that all the stakeholders seem to have the same goal in mind and that is keeping YRC a viable company."

Last month, YRC hired Richard Williamson, managing director of turnaround specialist Alvarez & Marsal, as its chief strategy officer to coordinate and oversee the recovery efforts.

Shares in the No. 1 U.S. less-than-truckload (LTL) company, were up 28.3 percent to $5.58 in afternoon trading on the NASDAQ. Volume topped 29 million shares traded, several times average daily volume in recent weeks.

The higher movement came even as BB&T Capital Markets analyst issued a report Wednesday warning that YRC's fate remained "in peril," and made sharp reductions to its earnings estimates for the trucking company.

"We believe the company continues to burn cash and continues to hang on in part due to asset sales and the banks willingness to waive covenants," BB&T analyst Thom Albrecht wrote in a report issued Wednesday. But, he said, "YRCW's situation remains dire both from a cash flow perspective and from a lack of stabilizing operations."

BB&T lowered its 2009 and 2010 per share estimates for YRC to a loss of $11.16 and $7.83, from a loss of $5.77 and $2.16 per share, respectively.

As the leading less-than-truckload (LTL) company, YRC takes small loads and consolidates them into single trucks. Problems with integrating two large acquisitions and a battered national economy have left YRC burdened by heavy debt and high fixed costs as demand for its services decreases.

But YRC has negotiated concessions from labor. And its creditors recently agreed to grant a tenth revision of the terms of the company's $950 million revolving credit facility and suspended until October 13 the requirement that YRC maintain at least $100 million in liquidity.

(Reporting by Carey Gillam; Editing by Tim Dobbyn)