Delphi files for bankruptcy
Auto parts maker Delphi said Saturday it filed for bankruptcy after warning for months that a filing was in the cards.Then there was speculation that GM would follow.
Delphi is the largest U.S. auto parts maker. The company filed for Chapter 11 bankruptcy protection for itself and 38 U.S. units in the U.S. Bankruptcy Court in New York. Delphi's non-U.S. units were not included.
It is the biggest bankruptcy filing in U.S. automotive history and promises to have a broad impact across the industry.
Almost 150,000 of its employees at the end of 2005 were union members, with 25,000 in the United Autoworkers here in the United States.
Will GM follow Delphi into bankruptcy?
The chances that General Motors will file for bankruptcy are now about 30 percent, according to one industry analyst, following the bankruptcy filing by the company's former parts unit, Delphi.
But, GM has cut a deal with UAW that may help it forestall such a drastic step.
UAW agreement will help lower GM's health costs
GM, UAW reach deal
The tentative agreement on health care is projected to reduce GM's retiree health-care liabilities by about 25 percent, or $15 billion, and cut GM's annual employee health-care expense by about $3 billion, CEO and Chairman Rick Wagoner said. Cash savings are estimated to be about $1 billion a year.
Even with the agreement on health care costs, GM will need further steps to return to profitability.
The world's No. 1 automaker said it lost $1.1 billion, or $1.92 a share, in the third quarter, excluding special items, compared with income of $315 million, or 56 cents a share a year earlier.
Analysts surveyed by earnings tracker First Call were looking for a loss of 87 cents a share.
The company also announced it is looking at possibly selling a majority stake in its finance unit, GMAC, by far its most profitable operation, as a way to restoring the unit's credit rating. GM was downgraded to junk bond status earlier this year due to ongoing losses.
There are sure to be more aftershocks from both the Delphi bankruptcy and the GM/UAW deal to come. These are ugly days for US Auto.
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