Where in the prospectus for Preferred A does it say that conversion to common shares is a case of default? My reading of the conversion is that they have a six month window (or thereabouts) in which conversion from Preferred shares to Common Shares is a normal allowed event. So they get to screw the Preferred without entering any technical default.
Further, this would raise their credit rating not harm it. S&P doesn't care if you are nice to people. All they care about are whether you 1) follow the rules of your obligations, and 2) whether you improve your overall ability to repay additional debt by your actions. In this case Yellow would be following the rules of the prospectus, and they would be materially improving their credit ratios while spending very little cash to do it.
As far as harming reputation, I've never once encountered a business that legally screwed over any class of equity or debt *legally* who had any long term consequence for taking advantage of contract language that favors them. Can you give any examples? Quite the opposite, the company and its stock would immediately become a more attractive investment because of improving credit ratios.