YRC CEO sees cushion in deals, credit

CHICAGO (Reuters) - YRC Worldwide Inc (YRCW.O), the No. 1 U.S. trucking company, should see more than $500 million in facility sales or sale/leaseback deals in 2009, while the integration of two units and a new credit agreement should help it survive the downturn, its top executive said on Monday.

"We feel that all of these measures give us a pretty comfortable cushion to survive," Chief Executive Bill Zollars said at the Reuters Manufacturing Summit in Chicago.

YRC's lenders agreed to amend its $962 million credit facility earlier this month.

The company will also benefit from the integration of its Yellow and Roadway units, which will enable it to cut costs and improve service, and YRC plans to use money raised from deals on its facilities to boost its cash position, Zollars added.

Zollars said the company plans capital expenditures of around $130 million in 2009 and spending in 2010 will "not be a lot higher."

The U.S. trucking industry has suffered from weak freight volumes since the third quarter of 2006, thanks to a combination of weak retail and auto sales, the meltdown of the housing sector and the decline of the overall economy.

This has forced truckers to slash prices to compete for business.

YRC has also had additional problems of its own because of over-capacity in its network following a couple of big acquisitions in 2003 and 2005.

The company has slashed 1,100 jobs and closed 27 facilities. Its unionized workers have agreed to more flexible conditions and approved a 10 percent wage cut in January in return for 15 percent stake in the company.

"The unions have been very quick to understand the situation we're in," Zollars said. "Now that they are shareholders they are very supportive of what we're trying to get done."

Zollars said that with credit conditions tight for the trucking industry, there is little sign of any impending acquisition activity -- in part because lenders won't fund acquisitions during a recession like this.

"People are hunkering down to weather the downturn," he said. "The trucking industry is still searching for a bottom right now."

Unlike YRC's U.S. operations, its Chinese unit continues to see double-digit growth, he added.

When asked if he expected the U.S. economy to recover in 2009, Zollars said "it's possible, but it's more likely to happen in 2010."

The U.S. government has pumped so much money into the market that "when it takes hold, the economy could take off like a rocket."

YRC's CEO said that while there were portions of the U.S. government stimulus package he disagreed with, "doing nothing is not an option."

"At the end of the day we're in a ditch," he said. "We need someone to help us out of that ditch."

(For summit blog: blogs.reuters.com/summits/)

(Reporting by Nick Carey, editing by Richard Chang, Gary Hill)