Allied Holdings Reaches Tentative Agreement With U.S. Teamsters

DECATUR, Ga., June 1 -- Allied Holdings, Inc. (AMEX:AHI) today announced that subsidiaries of its Allied Automotive Group have reached a tentative agreement on a five-year contract with their employees represented by the Teamsters Union in the United States. Terms of the new agreement are subject to ratification by the Company's U.S. employees who are represented by the Teamsters. A ratification vote is expected within the next few weeks. The new contract will cover approximately 4,300 drivers, mechanics and yard personnel in the United States. These employees represent approximately 70 percent of Allied Holdings employees.

Economic provisions of the new agreement include a wage freeze for the first two years of the agreement and also include wage increases of approximately 2 percent on June 1, 2005, 2 percent on June 1, 2006, and an additional 2.5 percent on June 1, 2007. The agreement provides for increases in health, welfare and pension contributions during each year of the agreement.

The economic provisions of the contract will increase the Company's U.S. Teamster labor costs approximately 1.1 percent in year one of the agreement, 1.3 percent in year two, 2.5 percent in year three, 2.5 percent in year four, and 3.0 percent in year five of the agreement.

In addition to the economic provisions, the agreement contains key changes in work-rule provisions that provide increased flexibility in the Company's operations in order to meet evolving client expectations and potentially improve the Company's ability to compete for new business. The remaining carhaul companies operating in the U.S. with employees represented by the Teamsters are signatories to the new agreement and will operate under the same contractual provisions as Allied Automotive Group.

In a related matter, the contract the Company's subsidiary, Allied Systems (Canada) Company, negotiated with the Teamsters Union in Eastern Canada earlier this year provided that wages in the first two years of the Eastern Canada agreement would be increased by an amount equivalent to the negotiated percentage increases in the first two years of the U.S. Teamsters agreement. Since wages were frozen for the first two years of the U.S. Teamster agreement, wages will remain frozen for the first two years of the Teamster agreement in Eastern Canada. The agreement in Eastern Canada is for a three year term ending October 31, 2005.

Commenting on the announcement, Hugh E. Sawyer, Allied's President and Chief Executive Officer said, "We are pleased to have concluded negotiations with our U.S. Teamsters without a labor disruption and are guardedly optimistic that our agreement with the Teamster negotiating committee will be ratified by the rank and file members."

Mr. Sawyer added, "Allied's agreement to provide increased health, welfare and pension contributions will allow our employees the security of outstanding medical and pension benefits for the next five years. Moreover, employee benefits are a key component of Allied's strategy to attract and retain the highly experienced carhaul drivers, mechanics and yard personnel who work tirelessly to serve our clients. Allied's U.S. Teamster labor costs will increase over the term of the agreement. However, the average yearly increase is substantially less than the average yearly cost increases of approximately 3 percent previously negotiated by the industry. Further, the five year contract term stabilizes Allied's U.S. Teamster labor agreement during a critical phase of the Company's turnaround."

Mr. Sawyer concluded, "We have established two years of wage freezes and key elements of work-rule flexibility that should ultimately enhance our ability to remain the industry leader. Allied will continue to face significant challenges as we strive to complete a difficult turnaround. However, this agreement is an important step in the Company's ongoing revitalization effort."

About Allied Holdings

Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle distribution continuum, and include car-hauling, intramodal transport, inspection, accessorization, and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles.