General Motors Corp. said it is increasing its previously-reported loss for 2005 by $2 billion. The announcement came after the auto maker received a more accurate picture of the costs of bailing out its former parts-making unit and revamping its loss-riddled North American operations.
The company now estimates it lost about $10.6 billion last year. It had previously reported a loss of $8.6 billion. The Associated Press reported that the company expects to increase the charge for its exposure relating to Delphi Corp.'s Chapter 11 bankruptcy case to $3.6 billion from the previous estimate of $2.3 billion. Additionally, GM will boost its North American restructuring charge to $1.7 billion from the previously reported $1.3 billion to cover higher expected costs for plants the company aims to close by the end of 2008. The company also will recognize a previously reported goodwill impairment charge of $439 million at its finance arm, General Motors Acceptance Corp.GM spokesman Jerry Dubrowski told AP that the biggest portion of the change, $1.3 billion for costs related to Delphi, was increased after GM "refined the range" of its potential liability for Delphi employees' compensation.
The change "reflects developments in the discussions with Delphi" and theUnited Auto Workers union on a comprehensive agreement, the company said in a statement. GM is attempting to negotiate a revised labor agreement with Delphi and the UAW to help Delphi's hourly workers. Delphi has asked the UAW and other unions to agree to pay cuts of more than 60 percent for its 34,000 unionized hourly workers. The unions have refused.
As a result of the announcement, GM shares fell by more than 2 percent on Friday. The company's shares fell 52 cents, or 2.3 percent, to $21.70 in morning trading Friday on the New York Stock Exchange.