U.S. to give Chrysler, GM new aid

WASHINGTON (Reuters) - The Obama administration will make about $500 million available to Chrysler LLC through the end of this month as it seeks to reach an alliance with Fiat, and up to $5 billion through May to help General Motors Corp restructure outside of bankruptcy, an independent oversight report on the Treasury Department's corporate rescue fund said on Tuesday.

Separately, the United Auto Workers (UAW) union urged its members to lobby the White House by phone or email to ensure that workers and retirees are treated fairly in negotiations at both companies on new concessions, which are considered vital for the automakers' to survive.

"We need President (Barack) Obama and his auto task force to stand up for the interests of workers and retirees in these restructuring negotiations," the union said in an appeal on its Web site to members.

The UAW represents about 26,000 workers at Chrysler and 62,000 at GM.

The union is under pressure along with bondholders and banks to help Chrysler and GM slash debt so they can restructure. The central issue for the UAW and the car companies is reaching an accord on restructuring the finances of a multi-billion-dollar retiree health care trust.

The administration's task force does not believe Chrysler can stand alone and is brokering meetings this week in Washington and Detroit to see if a deal with Fiat is possible.

The administration has offered up to $6 billion to help finance the alliance that would give Chrysler access to Fiat's small car technology and the Italian automaker a platform for building light trucks and a robust network for selling its vehicles in the United States.

Analysts and consultants have questioned whether the companies can close the deal and avert what most believe would be a certain Chrysler bankruptcy.

At the White House on Monday, Obama's chief spokesman, Robert Gibbs, would not forecast where the talks were headed but said the administration was working "with all of the stakeholders involved" and was hopeful a solution would be found to "continue the Chrysler brand" and strengthen the industry overall.

"The President continues to be involved in this issue and understanding the tremendous economic importance both for the overall industry and for the dozens of communities throughout the country that are dependent upon Chrysler and auto parts suppliers that supply Chrysler for good-paying jobs," Gibbs said.

The administration in March set aside up to $500 million to help Chrysler get through April, according to a report on oversight of corporate bailout funds prepared by the Treasury Department inspector general. GM was slated to receive up to $5 billion through May.

GM said on Monday it would cut another 1,600 salaried jobs by May 1. The reductions are part of GM's plan to slash its global salaried work force this year by about 10,000, or 14 percent. GM also aims to cut 37,000 hourly jobs worldwide by the end of the year.

GM and Chrysler, controlled by Cerberus Capital Management, received a $17.4 billion government bailout in December. Ford Motor Co is also struggling but opted against seeking rescue funds.

(Reporting by John Crawley; Editing by Lincoln Feast)