YRC reported a net loss of $177.9 million for the 3rd Quarter of 2011.  This loss compares to a net loss of $61.7 million during the same quarter in 2010.  At first glance, one would suggest that they operated 3 times worse than they did last year.  However, YRC began making union pension contributions again in June.  That $17 million per month contribution theoretically contributed $51 million of the $177.9 loss, especially when comparing year-over-year results.  The company also reported a special charge of $24 million for restructuring and award of equity to the union.  Subtracting that amount and we are now at a loss of slightly greater than $100 million.

Comparing on an apples-to-apples basis, it still exhibits a loss greater than last year and volumes have grown.  According to their results, YRC national gained 4.2% in tons per day compared to last year, same quarter, and 7.5% increase in revenue per pound.  The regional operating unit reported increases of 5.6% in tons per day and 8.2% in revenue per pound comparing on a year-over-year basis.

I am not a financial analyst and thus only commenting on what has been published by the company and certain analysts.  However, it appears that while there is modest improvement in business levels and yields, it is suffcient to get the ship righted.  LTL carriers will typically experience operational efficiencies with added tonnage.  This doesn’t seem to be happening at YRC, or not yet.  And that’s the point.  YRC is supposedly on a relatively short financial leash.  They must quickly show dramatic improvement so that current lenders can provide enough cash to keep the company viable.  There isn’t room for slippage. 

I don’t envy the job of James Welch and his new management team.  He knew he was in for a challenge and it may have just gotten tougher.  Third quarters are typically the highlight of the year for carriers.  Heading into the 4th Quarter this year and 1st Quarter next year will likely see lighter volumes and weather that could add to costs.  I am pulling for YRC.  They have gotten this far and they really have an outstanding history and are a good carrier. Clearly, the market cannot easily and cost-effectively absorb YRC’s business if they were to close the doors.