UPDATE 1-YRC may go bankrupt, other cos to gain: Morgan Keegan

June 15 (Reuters) - Morgan Keegan said there is a "very high probability" that struggling No. 1 U.S. trucking company YRC Worldwide Inc (YRCW.O) may go bankrupt, and that other less-than-truckload (LTL) companies may benefit significantly from the resulting increase in tonnage and prices.

"While YRC remains a viable company today, we do not believe this will be the case in the not-too-distant future given the current economic conditions," analyst Art Hatfield wrote in a note to clients.

In the event of a YRC bankruptcy, other LTL carriers, which consolidate smaller loads into a single truck, have enough space and trucks to absorb the additional freight in the market, the analyst said.

Hatfield raised Arkansas Best Corp (ABFS.O), Con-way Inc (CNW.N) and Old Dominion Freight Line Inc (ODFL.O) to "outperform" from "market-perform," citing a material potential upside to earnings and share price.

He kept his "outperform" ratings on Vitran Corp Inc (VTNC.O) and Saia Inc (SAIA.O).

"As the largest carrier in the LTL space, we believe that a bankruptcy of that magnitude would have substantial and widespread implications for the space," he said.

The bankruptcy could help improve pricing in the high single digits over the next six to 12 months, directly benefitting the companies' bottom line, Hatfield added.

(Reporting by Antonita Madonna Devotta in Bangalore; Editing by Anne Pallivathuckal)

((antonita.madonna@thomsonreuters.com; within U.S.+1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters messaging: antonita.madonna.reuters.com@reuters.net)) Keywords: USLTL/RESEARCH MORGANKEEGAN

(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nBNG91295