Transcon Posts ’87 Loss of $20 Million, Expects 1st-Period Deficit

Transcon, struggling to survive a yearlong rate war among freight haulers, reported Wednesday that it posted a net loss of $20 million for 1987, including a fourth-quarter loss of $7 million.

The Orange-based company expects losses to continue for the first quarter of 1988, said Jim Fox, a Transcon vice president.

Fox said the company’s business volume is up, yet the company cannot charge a high enough rate to be profitable.

Transcon and many freight haulers have been hurt by a rate war that began in late 1986, when one of the three largest haulers, Yellow Freight System, cut its rates. The rest of the industry followed.

Since then, larger trucking firms have posted sharply lower profits while several smaller firms, such as Transcon, have had large losses.

Revenues Dip 3% for Year

The $20-million net loss contrasts with net income of $2.3 million for 1986. Revenues for the year declined 3% to $333.4 million, from $343.4 million.

Transcon’s fourth-quarter net loss contrasts with a loss of $636,000 in the fourth quarter of 1986. Revenues for the quarter increased 6%, to $86.4 million from $81.4 million.

Paul Schlesinger, a trucking industry analyst at Donaldson Lufkin & Jenrette in New York, said the medium-sized companies such as Transcon are trying to compete nationwide, but their distribution lines are not as strong as the largest companies.

About half a dozen freight haulers collapsed in the rate battle during 1987. Schlesinger said there have been no more failures in 1988.

Schlesinger said Transcon’s ability to survive through January and February, the industry’s slowest months, indicates that the company is strong enough to continue operating for a while. But he said the long-term prospect for survival is “not encouraging.”

Schlesinger said shipping rates are not expected to increase significantly.

Directors Buy Stock

Despite the troubles, several Transcon directors have been buying stock in recent months.

J. L. Schram, a Transcon director since 1965, bought 4,000 shares in January for about $3 per share.

“I believe in the company, and I think as a director I should show my support,” Schram said.

Orin Neiman, Transcon’s chairman and chief executive officer, bought 218,100 Transcon shares for about $2.625 per share during the final quarter of 1987, increasing his stake to 224,000 shares, or 3.9% of the company’s 5.8 million shares outstanding.

And director A.J. Horn bought 1,000 Transcon shares in January for $3 per share.

Transcon stock closed Wednesday at $3.375 per share, unchanged for the day.