Swift downgraded, analysts note low driver pay

| Friday, September 17, 2004

Trading for shares in Swift Transportation Co. tanked Sept. 15 after the company lowered third-quarter earnings, leading to several analyst downgrades. Poor driver pay was one issue cited by analysts.

The Phoenix-based trucking company said earnings for the third quarter would be lower than expected by about 5 cents per share because the higher cost for fuel was not being recovered by its fuel surcharge on shipments.

Another 5 cents per share would be lost because expectations fell short on the ability to increase rates per mile traveled.

To combat that loss, Swift said it would revise its fuel surcharge to 1 cent for every 5 miles traveled, rather than for every 6 miles traveled.

Meanwhile, investment firm Bear Stearns downgraded its rating of Swift’s stock to “underperform,” saying the company “is suffering from structural issues including not enough management and systems for its tremendous size, a poor driver pay scale, a relatively aged fleet and a bad mix of freight in some lanes.”

The company added: “We believe Swift’s issues could take years to remedy and will require tough decisions requiring it to shed large amounts of freight, change its driver strategy and take on some new management.

“We believe current senior management has the skills to effect this turnaround but we question whether they have the stomach to effect a long term turn around plan which may cause near term pain.”

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