February 17, 2009 / 11:12 PM / 11 years ago

GM needs up to $30 billion in aid to avoid failure

DETROIT (Reuters) - General Motors Corp said on Tuesday it could need a total of up to $30 billion in U.S. government aid — more than doubling its original aid — and would run out of cash as soon as March without new federal funding.

Car salesman Ray Schaffer (L) shows a customer a 2009 Chevrolet Impala sedan at a dealership in Dearborn, Michigan December 29, 2008. REUTERS/Rebecca Cook

The request for additional aid from the top U.S. automaker came in a restructuring plan GM submitted to U.S. officials on Tuesday.

The GM restructuring plan of more than 100 pages was posted on the U.S. Treasury Web site.

The request came on the same afternoon that No. 3 U.S. automaker Chrysler requested an additional $5 billion from the current $4 billion in U.S. government aid, saying it expected the brutal downturn in the U.S. market to run another three years.

GM also said it had not reached deals with bondholders and its major union to reduce some $47 billion in debt but would work to reach those agreements by the end of March.

In response to signs of a prolonged slump in demand for new cars and trucks, the automaker also said it would step up cost-cutting, reducing its global workforce by 47,000 jobs this year and cutting five additional U.S. plants by 2012.

In addition, GM said it would cut its U.S. workforce by another 20,000 jobs by 2012 with most of those reductions coming earlier.

GM has been kept afloat since the start of the year with $13.4 billion in loans from the U.S. Treasury. Its expanded aid request for up to $30 billion includes a $7.5 billion credit line in the event that the autos market remains depressed.

Critics of the bailout of GM and its smaller rival Chrysler LLC have urged the government to consider financing a court-supervised restructuring for the two ailing automakers in bankruptcy.

GM said its own analysis of the costs and risks of a bankruptcy filing would require more than $100 billion in financing that could have to be provided by the U.S. government.

GM requested an unprecedented U.S. government bailout in December and had pegged its funding need then at up to $18 billion.

But the automaker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.

GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter.

Editing by Matthew Lewis

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