Good news from GM - really!
Mar 12th 2009 3:25PM
Updated Dec 4th 2009 11:06AM
General Motors Corp. (GM) is starting to stand on its own feet -- sort of.
The no. 1 North American automaker does not need $2 billion in loans it sought for March because its cost cutting is starting to take hold, Chief Financial Officer Ray Young told the Associated Press. Shares of the Detroit automaker rose 7.5 percent to $2 in early afternoon trading on the news. Even so, the stock is still cheaper than a gallon of gas in some U.S. states.
Earlier this year, GM borrowed $13.6 billion. The automaker said it would need as much as $16.6 billion to keep operating, including $2 billion in March and $2.6 billion in April. It plans to fire 47,000 workers and phase out brands such as Saturn and Hummer. Young told the AP that he would not comment on when the company would need more government loans or whether it will reduce its total funding request.
More good news for the beleaguered automaker may be coming courtesy of the United Auto Workers Union. People familiar with the matter told Bloomberg News that GM expects to more than double the $500 million savings Ford Motor Co. (F) expects to get from changes to its labor agreement.
"GM's savings are bigger than Ford's in part because of additional work rule changes, the people said, who asked not to be identified because the GM details haven't been released," Bloomberg reported, adding that Ford is skeptical of GM's claims.
GM is far from out of the woods. GM sales in February plunged 53 percent, and the automaker announced the closings of as many as five plants by 2012. The company still needs the agreement of its bondholders and help from President Obama's car task force.
Other than that everything is swell.