UPDATE 3-Arkansas Best Q1 loss wider than expected

* Q1 loss $0.85/shr vs est. $0.63/shr

* Revenue, tonnage rise

* Cost structure still the focus

(Recasts; adds details from conference call)

BANGALORE, April 23 (BestGrowthStock) – Arkansas Best Corp (ABFS.O: )
posted a much wider-than-expected quarterly loss despite
improving freight demand — further indication that the
proposed wage cuts at its Teamsters union is an important step
towards profitability.

Tonnage per day at its largest unit, ABF Freight, increased
3.3 percent and total revenue rose 6 percent, and the
less-than-truckload carrier said its business has stabilized.

“However, in order for ABF’s operating results to improve
in a meaningful way, we need further increases in freight
demand, strong improvements in pricing and the positive
financial impact of wage concessions,” said CEO Judy McReynolds
in a statement.

Recent quarterly results from truckers such as JB Hunt
Transportation (JBHT.O: ), Werner Enterprises (WERN.O: ) and Knight
Transportation (KNX.N: ) have pointed towards an improving
freight economy, but capacity and pricing issues continue to
trouble the industry.

Earlier this week, Arkansas Best said it and the Teamsters
union agreed tentatively to a 15 percent wage cut to help the
company save costs as it struggles to be profitable.

Teamsters then said the company was losing $10 million a
month in 2010 and liquidity continues to worsen — one of the
reasons it agreed to the pay cut. [ID:nSGE63J0KC]

If this agreement had been in place in 2009, cost savings
would have been about $74 million, the company said on a
conference call with analysts.

The proposed wage cut is still subject to final
ratification by ABF’s Teamster employees. The deal also calls
for “equal sacrifice” from non-union employees and the

Earlier this week, Dahlman Rose & Co analyst Jason Seidl
said “the worst things look in first quarter, the higher the
chances this agreement passes with union members.”

Arkansas Best, which lost $127.8 million in 2009, has
slashed quarterly dividend 80 percent to 3 cents a share, cut
over 3,200 jobs and eliminated salary increases to save costs.

Another LTL carrier YRC Worldwide (YRCW.O: ), struggling to
avoid bankruptcy, had asked for similar wage cuts from its
Teamsters union.

On the call, Arkansas Best said it continues to focus on
adjusting its cost structure – it cut about 200 jobs during the

The company also said results are a sign it needs a
consistently higher level of properly priced freight to fully
leverage operational resources and return to profitability.

Its first-quarter net loss was $21.4 million, or 85 cents a
share, compared with $18.2 million, or 73 cents a share, a year
ago. Analysts were expecting a loss of 63 cents a share,
according to Thomson Reuters I/B/E/S. [ID:nASA0098X]

Shares of the Fort Smith, Arkansas-based company were
trading up 2 percent at $32.13 Friday on Nasdaq. They have
risen about 20 percent in the last three months.

Stock Research Tools

(Reporting by A.Ananthalakshmi in Bangalore; Editing by
Aradhana Aravindan, Don Sebastian)

UPDATE 3-Arkansas Best Q1 loss wider than expected