Word: chryslers
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Both Ford Motor Co. and Chrysler LLC also have large pools of untapped cash reserved specifically to cover retiree health care under the terms of contracts signed in the fall of 2007 that were supposed to remove the retiree-health-care burden from company balance sheets. Meanwhile, new workers eventually hired to replace GM's, Ford's and Chrysler's current employees will no longer be eligible for postretirement health benefits. For the automakers, the costly transition is worth it, because it eliminates one of the major uncertainties they have faced over the years - the soaring cost of health care...
...retired employees, will have transferred some $23 billion to the new Voluntary Employee Benefit Association (VEBA), created by the contract. (That amount includes the $13.5 billion GM has already injected into the trust, plus another $9.5 billion yet to be contributed.) Ford owes $13.6 billion to its VEBA, and Chrysler, which doesn't make its finances public, owes between $6 billion and $9 billion to its new retiree-health-care trust...
...third option, between a no-strings bailout and Chapter 11--what some call conservatorship. It's bankruptcy-by-another-name, in which the government loans money to the automakers in return for equity stakes and concessions from creditors and workers. It's been done before--the 1979 Chrysler bailout followed such lines--but getting it right could be hard. "You're not very good at reworking companies," University of Maryland business professor Peter Morici told members of the Senate Banking Committee. "That's why we have bankruptcy courts...
...From there, Reid and Pelosi detailed a series of hoops they expect the automakers to jump through to qualify for bridge loans from Congress. Ford, General Motors and Chrysler must present business plans to the House and Senate Banking Committees no later than Dec. 2. As part of that presentation, they must prove that, in the long run, they are "viable" companies that not only can repay whatever loans they receive but also can demonstrate that they won't need to come back and ask for more money. The two committees will hold hearings to vet the plans...
...they would fly home on commercial planes or sell the company jets. Two of the three - GM's Richard Wagoner and Ford's Alan Mulally, who last year made a combined $37.4 million - also refused to give up their annual salaries. All the while, the trio, rounded out by Chrysler CEO Robert Nardelli, proclaimed their innocence for the mess their companies are in, laying the blame largely on an unprecedented credit crunch that has helped push car and truck sales to their lowest level in 25 years...