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* Shares jump 16 pct
* YRC says labor agreement should save $350 mln annually
* Company still faces financial challenges
By Carey Gillam
OVERLAND PARK, Kan., Nov 1 (Reuters) - Shares of YRC Worldwide Inc YRCWD.O raced higher on Monday after the top U.S. trucking firm said its workers had agreed to extend financial concessions considered key to the company’s survival.
The agreement with the International Brotherhood of Teamsters should save YRC, the nation’s top less-than-truckload carrier, an estimated $350 million annually, according to a statement by YRC officials.
The pact is “an important step in the company’s comprehensive recovery plan,” they said.
“This new labor contract positions our company for improved performance by providing a long-term market competitive cost structure as well as enhanced efficiency,” said Mike Smid, YRC chief operations officer.
The Teamsters said the agreement would save 25,000 jobs.
“As painful as the sacrifices are on an individual level, our members understood that by approving this restructuring plan they would be setting the stage for the company’s existing lenders to do their part and make this company an attractive investment for new investors and preserve their jobs,” Teamsters General President Jim Hoffa said in a statement.
The new labor contract extends the previous agreement, slated to expire in 2013, until March 31, 2015.
While the deal removes some hurdles to the company’s recovery, YRC still faces financial challenges, including a need to raise at least $300 million in additional equity by the end of the 2011 first quarter, said Deutsche Bank analyst Justin Yagerman.
Overland Park, Kansas-based YRC, which has been struggling to stay out of bankruptcy, said in October that its operations were improving after it was nearly forced into bankruptcy last December.
YRC shares were up 16 percent at $5.12 in early trading on the Nasdaq.
News of the labor deal angered one of YRC’s top competitors, ABF Freight System Inc. ABF, the largest subsidiary of Arkansas Best Corp ABFS.O, said it was filing a lawsuit on Monday against the Teamsters and YRC for violating a collective bargaining agreement that covers most unionized trucking employees in the United States. (Reporting by Carey Gillam; editing by John Wallace)