Revamped GM loses $1.2 billion

CEO Fritz Henderson said,
CEO Fritz Henderson said, "It is my mission to disprove the GAO," which said the U.S. investment in GM is unlikely to be recouped. (Paul Sancya/associated Press)
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By Peter Whoriskey
Washington Post Staff Writer
Tuesday, November 17, 2009

General Motors lost $1.2 billion in the first 83 days after it emerged from bankruptcy protection in July, the company announced Monday.

But officials with the nation's largest automaker said the company is far healthier than it was before it was rescued by the U.S. government because it has pared its long-term debt and operating costs.

It will begin repaying its debt to the United States next month, years earlier than required, the company said. It plans to return $1 billion per quarter until the $6.7 billion loan is repaid.

"We've been encouraged by the results we've seen," said chief executive Fritz Henderson, who also noted that the company performed better than its internal post-bankruptcy plan.

"When you come away from it, though, we lost money," Henderson said. "Not satisfactory."

He also predicted significant hurdles ahead.

The company expects to have negative net cash flow in the fourth quarter of 2009, because of payments of $2.8 billion in a settlement with parts supplier Delphi; continuing restructuring costs; and repayments of government loans to the United States, Canada and Germany.

But the vast global company is significantly more stable.

In its last quarterly earnings report in May, the company said it had lost $6 billion. Compared with that, Monday's announcement represents a significant improvement.

Moreover, GM is much smaller and far less burdened by debt.

Global employment at GM has fallen 14 percent since the end of December, from 243,000 to 209,000, the company said. Its U.S. salaried workforce fell 7 percent during that time, to 27,000, and its hourly workforce dropped 23 percent, to 48,000.

By virtue of the government bailout, however, the company's fate may be of broader interest than it once was.

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