Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Tom Wadewitz – JP Morgan.
Tom Wadewitz – JP Morgan
I wanted to ask a question on cash flow outlook in 2009, if conditions remain pretty difficult. There are things you control, obviously you are doing some hard work on wage reduction and the terminal integration so that is good news but you can’t control what the market does. What does the cash flow look like if you are not able to produce positive EBIT through the year? Are you able to produce positive cash or are there things other than the capex that you mentioned that would be draws on cash that would make it difficult to be cash positive in that scenario?
Timothy A. Wicks
As we think of 2009 and we think of what’s happening in the operation, first of all, I think it’s important that you reference the operating actions that we have taken. There were wage reductions with the teamsters as well as the non-union employees. Together we expect to remove about $300.0 million of costs out of our operating structure this year. And then by the end of the year being in a position where the integration removes another $200.0 million of operating costs.
That in this type of environment, removing $500.0 million of operating costs is a significant impact to producing operating cash flow.
Beyond operating cash flow there are a number of actions that we have been taking related to the balance sheet and probably the most important of which is the $150.0 million sale-leaseback transaction that we announced in December as one of the beginning stages of this phase of producing additional liquidity.
The first tranche of that transaction is planned to close today and we have full expectation that everything is on track, that that will in fact close today. And the second tranche is expected to close two weeks from today. And we have full expectation that will occur as well.
Beyond that, we have other transactions that we have identified and we know that we have significant interest from investors regarding other sale-leaseback transactions. And then the additional excess real estate that will be liberated by way of the integration.
So the combination of each of those actions, ones that we have already taken in terms of operating cost structure adjustments, the integration which is well underway and will be complete within the next month, as well as the sale-leaseback transactions and asset sales give us good confidence that we will be able to product sufficient operating cash flow through the remainder of the year.
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