GM posts wider loss, burns through $5.2 billion in cash

General Motors, battered by a global economic collapse and buoyed by U.S. rescue loans, posted its sixth straight quarterly loss and burned through $5.2 billion in cash as revenue shrank by more than a third.

The net loss of $9.6 billion in the fourth quarter compares with a loss of $1.5 billion a year earlier. The operating loss was $5.9 billion. GM said it expects auditors to cast doubt on the company's ability to survive as a "going concern."

The loss sealed CEO Rick Wagoner's fourth straight year without a profit and reflects the distress that GM showed last week when it asked the U.S. Treasury for as much as $16.6 billion in additional U.S. aid. GM, which has received $13.4 billion so far, said the request reflected a market that was deteriorating more rapidly than anticipated.

"2008 was an extremely difficult year for the U.S. and global auto markets," Wagoner said in a statement. "We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."

GM ended the year with $14 billion in cash, including its initial installment of $4 billion in U.S. loans. In its previous quarterly report in early November, GM said it was close to exhausting its cash supply. The automaker then petitioned Congress for help, was rejected by the Senate and bailed out by lame-duck President George W. Bush.

This year, GM has officially yielded the global sales title to Toyota Motor Corp., which itself is about to post its first annual operating loss in 70 years. GM recorded a 49 percent sales decline in January U.S. sales, as demand sank to its lowest mark since 1981.

GM's fate now rests with a task force appointed by President Barack Obama, who told Congress this week that the Detroit 3's ills were largely self-inflicted as he pledged to help create an industry that "can compete and win."

Wagoner was scheduled to meet later today with the task force, headed by U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.

Regional results

GM lost money in each of its four regions last quarter.

North America had the steepest deficit, with an adjusted net loss before taxes of $2.1 billion, almost double the year-earlier total. On that same basis, GM Europe had a $956 million loss, more than four times as much as in the fourth quarter of 2007.

The figure was $879 million in the GM Asia Pacific region $154 million and in Latin America, Africa and the Middle East. Both regions were profitable a year ago.

GM, like smaller rival Chrysler LLC, faces pressure to wrap up concession talks with the UAW on how to cut funding promised to a health-care trust fund. Chrysler has received $4 billion in U.S. loans and seeks $5 billion more.

GM's has offered the UAW up to $10.2 billion in new equity in order to give up a cash claim on half of the $20.4 billion it is owed for the trust fund.

The UAW reached a deal with Ford Motor Co. this week on terms to restructure its own retiree health-are debt to the union on similar terms.

But GM's parallel negotiations with its bondholders have been more difficult because debtholders have been asked to make a deeper concession than the UAW.

Under the terms of GM's bailout, bondholders representing some $27 billion in debt face pressure to swap into equity in a deal intended to cut remaining bond debt to about $9 billion.

But bondholders have objected to both GM's remaining debt load and the higher payout ratio for the UAW.

GM's shares have plunged by 89 percent over the past year partly in recognition of the risk that either the government-brokered restructuring or a bankruptcy would wipe out most of the automaker's current equity.

"We continue to believe the government will support GM outside of a bankruptcy," J.P. Morgan credit analyst Eric Selle said in a note for clients this week.

GM could win a deal with bondholders to reduce its $27 billion in bond debt by 60 percent, he said, if the government were willing to offer a debt guarantee.

Reuters contributed to this report.

By Jesse Snyder- Automotive News