Final 24 hours for Chrysler; unions agree deal
April 30, 2009 by David Twomey
With less than 24 hours to go US carmaker Chrysler is rushing to seal a deal with Italy’s Fiat and its remaining creditors, to avoid having to file for bankruptcy under US Chapter 11 protection laws.
At the same time the powerful United Auto Workers union has voted overwhelmingly to accept a deal that will make its health fund the major shareholder in any Chrysler-Fiat alliance.
The UAW will effectively control 55 per cent of the shareholding in the Chrysler-Fiat alliance as part of a deal to reorganise half the US$10.6 billion obligation that the carmaker owes a retiree health care trust that the union will administer.
UAW President Ron Gettelfinger said in a statement, “Our members have responded by accepting an agreement that is painful for our active and retired workers, but which helps preserve US manufacturing jobs and gives Chrysler a chance to survive.”
“Today’s vote enables us to continue our work to meet the conditions laid out by the US Treasury Department,” Chrysler President Tom LaSorda said in a prepared statement.
Meanwhile, Reuters newsagency said Chrysler was rushing to clinch deals with Fiat SpA and a fractious group of lenders in a last-ditch effort to avoid bankruptcy as the final day began of a government-imposed restructuring deadline.
US President Barack Obama said concessions by Chrysler’s unions and its major bank lenders had made him more hopeful than he had been just a month ago that the struggling automaker could be made viable.
But he added that it was still not clear if Chrysler would need to seek bankruptcy protection to cement concessions from its lenders and move ahead with a planned alliance with Fiat.
“The details have not yet been finalised so I don’t want to jump the gun, but I’m feeling more optimistic than I was about the possibilities about that getting done,” Mr Obama said in a news conference.
The White House has set a series of aggressive targets for Chrysler in order to justify another US$6 billion in investment on top of the US$4 billion in emergency loans that the government has extended since the start of the year.
The number three US carmaker has won cost-cutting concessions from its unions in the United States and Canada and is on the brink of closing its deal with Fiat, a person involved in those negotiations told Reuters.
That leaves the focus on ongoing debt restructuring talks spearheaded by the Obama administration’s automotive task force and former investment banker Steve Rattner.
An Obama administration official said Chrysler talks could run up to the deadline of 11:59 p.m. EDT on Thursday.
Fiat and Chrysler are prepared to complete a merger deal by Thursday that would be taken into bankruptcy court as a key element of the restructuring plan if needed, a person with direct knowledge of the preparations said.
Print it: 
So the unions play a large part in driving Chrysler to the brink of bankruptcy then then end up the majority shareholder in the ensuing debacle. What a joke.
At least this time when they drive Chrysler into the ground they will have no one to blame but themselves.
So it’s a choice between a union-controlled Chrysler or a bankrupt Chrysler. The best alternative is no Chrysler at all, because who the Hell’s going to buy the products of either entity?
What everyone’s forgetting is that the market has shrunk 40%, so who needs Chrysler, or GM for that matter?
I think like many I’ll have a tear in my eye if Chrysler goes to the wall, purely because they did things a bit different and they were producing desirable, but unreliable cars, GM has had its day, but it will be sad if Chrysler goes.
Why on earth is a great brand like Fiat jumping on that sinking ship? Fiat should stay away from Chrysler and big cars and focus on their fantastic small ones.
I couldnt agree more, fiat will be owned by the UAW why would they want that.. why would they give up being a self controled company to merge and give up everything for what?.. . a car company thats about to go belly up omg whoever signes this from fiat is one bribed up CEO because they wont care so long as they get the money for that signature
Hay i wonder what happens when thay wont to take any strikes or union action now.Thay will have to consult them selfs thay will start seeing things in a different light now i bet
Alex buying Chrysler allows Fiat a big and established Dealer network for selling their “fantastic” small ones in the USA. Instant credibility in a burgeoning small car market.
The best thing to do is to file for bankruptcy asap. Nothing good will come out of the union with FIAT. Nobody buys FIAT cars outside the EU anyway.