General Motors Corp. says its restructuring plan is starting to take hold, improving the automaker's fortunes at least to the point that it won't need a $2 billion government loan installment that it had requested for March.
Chief Financial Officer Ray Young said Thursday that GM formally told the Obama administration's autos task force on Wednesday that it wouldn't need the money this month. But in an interview with The Associated Press, Young would not say when the struggling automaker would need more government money or whether it will reduce the size of its loan request.
"It seems like our companywide cost reduction efforts are moving well, as well as we've been able to defer spending that we previously anticipated in January and February," Young said. "I think that's a positive development."
GM, which is living on $13.4 billion in government loans, has requested another $16.6 billion as it tries to weather the worst auto sales slump in 27 years.
Young said GM's cash burn rate, the amount of spending above revenue, has slowed since the company submitted a viability plan to the government on Feb. 17.
"The cash burn that we thought we were going to have in January and February is not as high. Clearly we still have a cash burn," he said, attributing the burn rate to a lack of revenue from the company shutting down many of its factories for the month of January.
He would not say if GM will need another government loan draw in April. In its viability plan filed Feb. 17, GM asked for $2 billion in March and another $2.6 billion in April. It would not need any more money until 2011 when a $4.5 billion revolving line of credit comes due. The company also says it could need up to $7.5 billion more if the economy doesn't improve, for a total of $30 billion by 2011. It plans to start repaying the loans with $2 billion in September.
GM shares were up 15 cents, or 8 percent, to $2.01 in midday trading.