General Motors Corp. and Chrysler LLC told the federal government they may need up to $21.6 billion more combined in bailout loans to put them on the road to recovery, and outlined extensive bankruptcy contingency plans even while continuing to lobby against the option, according to the Wall Street Journal. The recovery plans submitted to the U.S. Treasury would cement GM’s fall from the top of the global auto industry to a smaller, more flexible car company relying less on its core U.S. market for sales. Chrysler, meanwhile, appears to be steering itself toward a deal or venture with Fiat SpA.
According to Bloomberg, GM said it was making progress on complex deals to reduce some $48 billion in debt owed to bondholders and the United Auto Workers union but had fallen short of an initial requirement to complete those agreements by yesterday’s deadline for submitting the plans to U.S. officials. “The president’s team will be reviewing these reports closely in the days ahead,” White House spokesperson Robert Gibbs said in a statement. “It is clear that going forward, more will be required from everyone involved.” The company said it needs some of the cash next month to survive as it sheds brands and cuts 47,000 more jobs worldwide.
Chrysler said it requested another $5 billion in U.S. government aid, saying it expected the current brutal downturn in the U.S. market to run another three years, reports Reuters. Chrysler said concessions from its stakeholders—United Auto Workers, dealers, suppliers and second lien lenders—were implemented or fundamentally agreed upon. In its restructuring blueprint, the number three U.S. automaker also said it planned to cut its outstanding debt by $5 billion and reduce fixed costs by $700 million in 2009. U.S. Treasury Secretary Timothy Geithner said he will start reviewing the plans later this week when he and Lawrence Summers, director of the White House National Economic Council, convene an autos task force for President Barack Obama.
Meanwhile, an Obama Aide Says Bankruptcy Can’t Be Ruled Out for General Motors and Chrysler, according to the New York Times. President Barack Obama’s chief spokesman said the administration can’t rule out a restructuring through bankruptcy for struggling automakers, while adding the industry is “tremendously important” to the economy.