Uber Causes Yellow Cab To Contemplate Bankruptcy

(Newswire.net — January 12, 2016) Richland Hills, Texas — Yellow Cab Co-Op mailed out a letter to shareholders in December of 2015 announcing that it intends to file for bankruptcy in the near future.  In the meantime operations will not be affected as the company attempts to successfully restructure its finances.

In the December letter to shareholders, Yellow Cab Co-Op President Pamela Martinez wrote, “We are in the midst of serious financial setbacks, some of which are due to business challenges beyond our control and others of our own making.”  “Today we are faced with fiscal obligations that far exceed expected income,” she went on to convey.

Yellow Cab Co-Op has about 530 medallion holding drivers who have seen their business decrease in the past few years due primarily to online rivals like Uber and Lyft who are able to offer lower prices for essentially the same type of service.

The fact that companies like Uber and Lyft are able to offer more flexible hours and significant bonuses, has made it more difficult for traditional cab companies to retain experienced drivers who have demonstrated excellent defensive driving skills.

The global taxi business is concerned that Yellow Cab Co-Op may just be the tip of the iceberg as it relates to future financial problems for the industry.  Many individual taxi companies have begun to lobby for legislation to protect themselves against this new form of competition.  It does not help their cause that Uber alone is valued at more than $60 billion dollars and will certainly spend the money necessary to represent their interests with regards to any potential future proposed legislation.

In her letter to shareholders, Martinez went on to write, “The big question on everyone’s mind, I expect, is when we will return to paying dividends?”

The answer, she wrote, is “Certainly not this month, and I cannot make any promises as to when.” In order to be able to do so,” she said, “Yellow needs to net more drivers.”

“We must get more shifts and more drivers paying them,” she wrote, “This is our principal source of income.”

It is clear that Yellow Cab Co-Op has some serious issues that it must solve if it is going to see some light at the end of the tunnel.  If app services like Uber and Lyft continue to gain traction, however, other taxi firms may face the same fate as Yellow Cab Co-Op, or worse.