Chrysler, CAW in tentative deal, GM draws $2 billion

By David Bailey and John Crawley

DETROIT/WASHINGTON (Reuters) - Chrysler won a round of concessions from its Canadian union on Friday while General Motors Corp soaked up $2 billion more in U.S. government aid and Ford Motor Co posted a narrower-than-expected loss that sent its shares soaring.

The developments underscored the diverging fortunes of Ford and Chrysler and GM, both of which are operating under U.S. government oversight and increasing pressure to win cost-saving agreements to avoid bankruptcy.

Chrysler and the Canadian Auto Workers' (CAW) tentative agreement on a new labor contract is intended to cut costs and keep the automaker from bankruptcy.

Under the agreement, the No. 3 U.S. automaker would leave hourly base pay intact but cut a range of benefits, including an annual Christmas bonus, and add flexibility to work rules that would make it easier for Chrysler to hire temporary workers.

Chrysler would also cut the third production shift at its Windsor, Ontario minivan plant.

Taken together, the contract changes would save Chrysler an estimated C$240 million in annual labor costs, CAW President Ken Lewenza said.

The leadership of the Canadian union also agreed to work with Chrysler to create a trust fund to pay for retiree health care modeled on a similar fund that the United Auto Workers union approved for Chrysler's U.S. workers in 2007.

Chrysler still owes over $10 billion to the UAW for that trust fund and is seeking concessions from the U.S. union that would allow it to pay stock, rather than cash, into the fund in a restructured company.

Talks on that issue between the UAW and Chrysler have been slow-moving and Lewenza urged other Chrysler stakeholders to make concessions needed to keep the automaker from bankruptcy.

"We were told by Chrysler that they still didn't have entire deals done to avoid a bankruptcy filing. We urge all the stakeholders in the United States to make equal sacrifices," CAW President Ken Lewenza told reporters in Toronto.

The tentative deal, which will be put to CAW-represented workers for ratification this weekend, is one of several agreements that Chrysler needs to reach by next week to win new U.S. government aid and avoid liquidation.

Chrysler faces an April 30 deadline to reach agreements that would cut its debt, labor costs and cement an alliance with Italy's Fiat to satisfy the Obama administration.

The government has not yet extended new money to Chrysler, which has been operating on $4 billion of emergency loans, but officials said they were working around the clock to avert a Chrysler bankruptcy filing and facilitate an alliance between Chrysler and Italy's Fiat SpA.

GM BATTLES ON

The immediate deadlines for Chrysler partly eclipsed General Motors' struggle. The Obama administration has rejected a GM restructuring plan, ousted its chief executive and told the automaker to cut deeper and move faster if it wanted to continue to receive government support.