DETROIT (AP) - Even if Chrysler LLC gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next, its chief financial officer said.
CFO Ron Kolka, in a brief telephone interview with The Associated Press, said the company planned for the $4 billion it received Jan. 2 to last through March 31. The company is talking with the Obama administration's autos task force about getting another $5 billion, and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans.
Kolka wouldn't say what would happen if the company doesn't get further government aid, saying only that he's not planning to run out of money.
Chrysler's viability plan submitted to the Treasury Department on Feb. 17, he said, calls for the additional government aid.
"Following that, the next critical low point in cash is July shutdown," he said Friday.
Automakers generally book revenue from a vehicle once it leaves the factory and heads for a dealership. But when it doesn't produce cars during the shutdown, the revenue stops flowing.
Kolka said Chrysler planned conservatively so the company can be viable even at the current U.S. industry annual sales rate of 9.1 million vehicles, the lowest level in 27 years.
Executives with Chrysler and General Motors Corp., which also is using government loans to stay out of Chapter 11 bankruptcy protection, met with the government task force on Monday in Detroit, visiting GM's tech center and a Chrysler pickup truck factory in the Detroit suburb of Warren.
The members, led by Wall Street financier Steven Rattner and Steelworkers union official Ron Bloom, asked probing questions of Chrysler executives, but didn't express doubts about the company's plans, Kolka said.
"They were not negative and they were not critical," he said.
"They were asking the right questions."
Chrysler's plan submitted to the government has conservative assumptions about industry sales and per-vehicle pricing, and doesn't include the company benefiting from any potential uptick in per-vehicle pricing or a possible alliance with Italian automaker Fiat Group SpA.
Chrysler is in talks about Fiat taking a 35 percent stake in the Auburn Hills, Mich.-based automaker in exchange for its small-car technology.
Kolka also said Chrysler's tentative deal on labor cost concessions with the United Auto Workers union will comply with the terms of the government loans. The loan term sheets set targets for GM and Chrysler to make their total hourly labor costs equal to those of Japanese automakers with U.S. factories.
UAW workers at Ford Motor Co. have ratified contract changes that cut labor costs to $55 per hour including wages, pensions, retiree health care and other benefits. That's still about $6 more than the highest Japanese company.
GM and Chrysler have reached labor cost deals with the UAW but details haven't been released pending a vote by workers. Both companies are still negotiating changes in payments to a union-run trust fund that will take over retiree health care expenses starting next year.
The loan terms also set a target for Chrysler and GM to swap equity for 50 percent of the cash they were scheduled to pay into the trust funds.
Kolka said Ford's deal on the trust fund doesn't comply with the terms of the government loans and won't work for Chrysler. He said Chrysler and the UAW have agreed in principle to an equity swap, but the mechanics are still being negotiated.
Ford agreed to swap 50 percent of its payments for stock, with plans to issue more stock to the trust if the price falls.
(Copyright 2009 by The Associated Press. All Rights Reserved.)
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