GM confident of survival in March without new aid

GM confident of survival in March without new aid
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First Published: Fri, Mar 13 2009. 09 47 AM IST
Updated: Fri, Mar 13 2009. 09 47 AM IST
Detroit: General Motors Corp has told US officials that it can survive without $2 billion in additional aid that it had requested to get through March, the automaker said on Thursday.
GM said in a statement that it had been able to defer the first tranche of its aid request after stepping up the pace of planned cost-cutting and holding back on some spending that had been planned for January and February.
However, it remains unclear whether the development will result in a scaled-back overall request for assistance on top of the $13.4 billion bailout approved in December.
“A lot depends on how the market and the economy goes. We’ve run a little ahead on some of the cost reduction stuff, which is good, but at this point the market is still tough,” GM chief executive Rick Wagoner said on the sidelines of a business conference in Washington. “We haven’t updated it.”
An Obama administration task force headed by Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers is considering GM’s request for more than $16 billion in additional help and a separate request for up to $5 billion from Chrysler.
Chrysler received $4 billion in the same bailout package that was extended to GM last year.
The task force has until the end of March for its deliberations as GM works to secure new concessions from its bondholders and the United Auto Workers union to cut its debt by a combined $28 billion.
Shares of GM jumped after the announcement and closed up 17% to $2.18 in New York trade.
Despite GM’s decision on Thursday, the White House is still taking a deliberate approach for dealing with the distressed auto industry.
“In terms of what GM has announced today, I don’t know whether that makes the current job that much easier,” said White House spokesman Robert Gibbs of task force decision-making.
Gibbs said Obama has been briefed on progress of the task force.
The White House also said the task force is focusing on struggling suppliers, who serve US and overseas manufacturers and have also sought billions in government assistance to stay in business.
Wagoner also expressed concerns about that sector on Thursday.
“I think the state of the supply base is difficult. We’re watching it closely and we’re trying to work with them and we need to do that,” Wagoner said.
On Wednesday, the top US executive of Toyota Motor Corp told reporters that the company is concerned with the health of about 100 suppliers but is worried about 20 to 30 within that group. Jim Lentz said Toyota is working on contingencies to offset any possible supply disruption.
GM burned through $5 billion in the fourth quarter and ended the year reliant on the first $4 billion in loans it received from the Treasury.
Under the restructuring plan submitted to the government in mid-February, GM had forecast that it would burn through another $5.1 billion in January and February.
It was not immediately clear how the cost-cutting efforts GM made in the first months of the quarter had affected its projected cash burn rate.
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First Published: Fri, Mar 13 2009. 09 47 AM IST
More Topics: General Motors | Automaker | US | Recession | Bailout |