Consolidated Freightways to file for bankruptcy protection; Canadian Freightways not affected

VANCOUVER, Wash. (Sept. 3, 2002) — Consolidated Freightways Corp, the third largest less-than-truckload carrier in the United States, said it will file for Chapter 11 bankruptcy-court protection today and lay off 15,500 employees.

Operations at Canadian Freightways Ltd., its subsidiary based in Calgary, will continue, the company said.

Consolidated Freightways has struggled for nearly two years to reverse a series of quarterly losses. The Vancouver, Wash., company’s most recent blow came when one of its surety bondholders canceled coverage related to self-insurance programs for workers’ compensation and vehicular casualty. Moreover, the company anticipated that a second insurer would also cancel coverage.

“Without the availability of further financing, the Board of Directors reluctantly concluded that the company simply could not continue to operate, pay employees, and meet its obligations,” Consolidated Freightways’ chief executive John Brincko said in a statement.

More than 80% of Consolidated Freightways’ 15,500 employees will be terminated immediately. A group of managers will be kept on for a short period until the company has been liquidated.

Consolidated Freightways reported first-quarter 2002 revenue of $463 million (all figures US), down from $574.6 million in the year-ago quarter. Revenue for the 2001 year was $2.24 billion. The company’s first-quarter loss jumped to $36.5 million from $1.8 million a year ago.

In a statement to customers today, Canadian Freightways president and chief executive Darshan Kailly said he was “disappointed” that Consolidated Freightways could not right its financial situation, but noted that “Canadian Freightways is operationally and financially independent, with the resources, the people, and the coverage to keep all of their customers’ shipments moving without interruption.”

He said the Canadian group of companies, which includes EPIC Express, Milne and Craighead, and UTL Transportation Services, has been profitable every year since 1962.