GM posts a $2.5B loss in Q3

DETROIT - General Motors Corp., once the bluest of blue-chip U.S. corporations, said yesterday that it would fall "significantly short" by June of the cash needed to keep operating unless it received government aid and the national economic slump ended.

The company also posted a third-quarter net loss of $2.5 billion, announced plans to lay off 3,600 workers and said it had suspended talks to acquire Chrysler L.L.C. While it did not specifically name the automaker, GM said it was setting aside considerations for a "strategic acquisition."

"While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside," the company said in a statement. Privately held Chrysler said it would not comment on GM's statement.

Meanwhile, Ford Motor Co. said yesterday that it had lost $129 million in the third quarter and that it would eliminate 2,260 white-collar jobs. Ford said it had burned through - that is, spent more than it took in - $7.7 billion in available cash during the quarter. However, it said that it still had enough money to keep operating.

GM said its available cash had fallen to $16.2 billion on Sept. 30 from $21 billion at the end of June. That pushes the company closer to the $11 billion minimum it says is needed to pay bills.

Government aid, GM said, will be essential because of the slow economy and credit crisis.

If companies run out of cash, they generally can sell assets, cut costs or file for bankruptcy protection to keep creditors at bay while they develop a financial-reorganization plan.

But in a conference call with reporters and analysts, GM chairman and chief executive officer Rick Wagoner said the company would "take every action we possibly can" to avoid bankruptcy.

A bankruptcy filing "would be a disaster far beyond General Motors and a sad chapter in American history," Wagoner said.

Should GM take such a step, the result would be 2.5 million jobs lost in the first year among automakers, suppliers and related businesses, according to a Nov. 4 report by the Center for Automotive Research, based in Ann Arbor, Mich.

A U.S. rescue package for GM, Chrysler and Ford is likely to be approved before President Bush leaves office in January, said Dennis Virag, president of the Automotive Consulting Group in Ann Arbor.

"Either the federal government provides money for a bailout and lets the industry retool, restructure and move ahead, or the industry dies," Virag said.

GM's quarterly net loss amounted to $4.45 a share and compared with a record-setting loss of $42.5 billion, or $75.12 per share, in the year-ago quarter.

Revenue fell to $37.9 billion from $43.7 billion in last year's third quarter.

GM said the indefinite layoffs would begin early next year as it slowed production at 10 of its assembly plants.