Chrysler Corp. today reported a net loss last year of $1.1 billion -- the largest single year loss in U.S. corporate history.
The 1979 loss was slightly higher than the company had predicted in petitions to the federal government last year when it won financial assistance to prevent bankruptcy. At the same time, Chrysler predicted 1980 would not show much of a rebound from its current depressed operations.
Lee Iacocca, the Chrysler Board chairman, said losses this year should be reduced to about $500 million.
The company expects to regain profitability in 1981, based on an infusion of outside money -- $2 billion from private sources and $1.5 billion in bank loans backed by the federal government, as approved by Congress late last year.
Faced with prospects of a Chrysler failure and unemployment for up to 500,000 company employes or workers in related industries, the Carter adminstration asked for financial aid to keep the nation's third-largest automobile manufacturer in business.
Chrysler's loss in 1979 was in contrast with a loss of $204.6 million the previous year as sales declined to $12 billion from $13.6 billion.
Business deteriorated badly in the final half of last year. Chrysler said today the fourth-quarter loss swelled to $375.8 million compared with year-earlier profits of $43.2 million. Sales fell to $3.1 billion from $4 billion.
Iacocca and President J. Paul Bergmoser said that while the level of total sales in January "appears to be somewhat encouraging," 1980 overall will be "a year of slow recovery for Chrysler."
Chrysler's car and truck sales improved as soon as Congress approved financial aid on Dec. 21, although they continue to remain 18 percent below the levels of last year. In the four 10 day selling periods after passage by Congress, Chrysler sales of cars in the United States increased 25 percent over the previous four 10 day selling periods.
To boost sales further, the company introduced last month a promotional program unprecedented in industry history, featuring a 30-day, 1,000-mile money-back guarantee and other inducements to buy.
Iacocca predicted that Chrysler's first quarter losses will continue at about the same rate as losses in the final quarter last year.
Worldwide vehicle sales of Chrysler in 1979 slumped to 1.8 million units from 2.2 million the previous year.
Chrysler's board, meanwhile, omitted dividends again and the firm's independent auditors said they could not fully back the troubled auto company's 1979 and 1978 financial statements.
Dividends were dropped for common and preferred stock. The last previous common dividend was 10 cents a share last June. The preferred dividend of 68 3/4 cents per share was dropped for the second consecutive quarter.
Auditors Touche Ross & Co. said its qualification of Chrysler statements is based on many factors.
"The ability of the corporation to operate in accordance with its operating and financing plans is dependent on many factors, some of which are beyond the corporation's control, including the effect of government energy, safety and emissions policies, the availability and price of gasoline, overall automobile industry market conditions, acceptance of the corporation's products and the impact of world economic and political developments," the accounting firm stated in a letter to shareholders today.
Separately, Chrysler announced it will temporarily close a car assembly plant in St. Louis and three truck assembly plants in Detroit, St. Louis and Warren, Mich., next week to balance inventories. About 9,000 workers will be idled by the additional plant closings.
The proposed federal assistance to Chrysler requires that the company get $2 billion of assistance in the near future. To date, Chrysler has reached agreement with the United Auto Workers union on a scaled-down contract with concessions of $462.5 million. Chrysler also has to renegotiate loan agreements with which it is not complying at this time.
Chrysler also has won from suppliers a deferrment of about $125 million in payments due until April, to help the company with interim financing until April 1. This week, Chrysler arranged a loan of $100 million from Peugeot-Citroen, France's largest auto company, secured by Chrysler shares of the European firm.
A less troubled automaker, Volkswagen of America, wants to put its second U.S. Auto assembly facility near Detroit in a huge Army missile plant that is winding down production, Michigan officials said in Washington today.
The disclosure came as a House armed Services subcommittee headed by Rep. Lucien Nedzi, D-Mich., approved legislation to help pave the way for the deal.
The bill would convey ownership of the 2.1 million-square-foot Michigan Army Missile Plant in Sterling Heights to the state. In return, the state would build two new office buildings for the Army to house 2,300 federal workers who would be displaced from the missile plant.
Michigan officials said Volkswagen would reimburse the state for constructing the two buildings, costing between $21 million and $25 million, and would take over the missile factory for an auto assembly plant that would employ about 5,000 persons.