$9.4-Million Loss Posted by Transcon

Hit hard by an industrywide price war, Transcon on Wednesday reported a record net loss of $9.4 million for the first quarter and said it is asking employees to accept a wage cut in an attempt to stop the hemorrhaging.

Employees own 49% of the company’s stock because of a previous wage concession agreement.

The interstate trucking company lost $5.4 million in the first quarter of 1987 and its net losses for the past 18 months now total $30 million.

Revenue for the first three months, however, increased 1% to $76.6 million from $75.8 million a year earlier, a sign that Transcon is at least holding its own at a time when at least three other large trucking companies have folded.

Orange-based Transcon has been struggling for survival since a rate war started among truckers in late 1986. Steep discounting has led to the failure of several trucking companies, and analysts have predicted that Transcon’s losses could eventually lead to its failure.

But Transcon Chairman Orin Neiman said Wednesday that he expects the company to return to profitability as early as the second half of the year if workers accept the wage cuts in a proposed labor contract.

Tentative Agreement

Neiman said Transcon has reached a tentative contract agreement from negotiators from the International Brotherhood of Teamsters, and union members are expected to vote on the contract later this month.

“Our tentative agreement would allow all employees to share in the company’s profits in return for certain wage and salary concessions,” Neiman said in a statement.

James Chisholm, Transcon’s chief financial officer, declined to provide details of the agreement.

Neiman said that as long as the industrywide price discounting continues, Transcon cannot expect a profit unless it reduces labor costs, which account for about two-thirds of the company’s expenses. Transcon employs 4,100 workers in 45 states.

Chisholm said Transcon expects union members to approve the contract, which would take effect this summer. The previous contract expired March 31.

Transcon workers became company shareholders under an employee stock plan established in 1983 in return for workers’ acceptance of five consecutive years of wage concessions.

Transcon stock closed unchanged at $3.25 per share Wednesday on the New York Stock Exchange. In the past 12 months, the stock has sold for a high of $6.25 a share and a low of $2.25.