DETROIT (Reuters) - General Motors Corp. (GM.N: Quote, Profile, Research) is moving as fast as possible to turn itself around and has no intention of filing for bankruptcy, GM Vice Chairman Robert Lutz said on Monday.
"There is no plan for GM to become bankrupt," Lutz told reporters at the North American International Auto Show.
The show, in a cavernous convention center overlooking GM's headquarters in downtown Detroit, opened on Sunday after a disastrous year for the world's largest automaker in 2005.
The one-time U.S. industrial icon stumbled from one reversal to another, led by more declines in its U.S. market share, huge financial losses and painful restructuring moves.
GM Chief Executive Rick Wagoner on Sunday had reiterated his previous denials that a bankruptcy filing was under consideration.
GM's shares, which lost more than 50 percent last year, closed up $1.61, or 7.7 percent, at $22.41 in afternoon trading on the New York Stock Exchange after Goldman Sachs analyst Robert Barry said a bankruptcy filing by the company was "very unlikely any time soon."
But speculation about insolvency has dogged the company for months now. It was Lutz's turn to shoot down the dreaded "B" word on Monday, as he took to the showroom floor to introduce a redesigned prototype version of GM's classic Chevrolet Camaro pony car from the late 1960s.
Standard & Poor's analyst Scott Sprinzen, who cut GM's debt rating further into "junk" territory last month, said GM could well be forced to file for bankruptcy as part of a bid to slash its mountainous labor, health-care and pension costs.
But Lutz rejected the possibility out of hand.
"I don't care which junior analyst on Wall Street or two years out of Harvard B-School says -- 'Oh, well, General Motors inevitably headed for bankruptcy' -- Well you know, our view of that is, that's a crock. It's not going to happen."
"I'VE SEEN BANKRUPTCY"
An outspoken auto industry veteran, who turns 74 next month, Lutz acknowledged GM's turnaround is far from easy.
The company is burdened with so-called "legacy costs" that include health care and other benefits to nearly three retirees for every active employee on its payrolls, he said.
But Lutz, who has worked at each of Detroit's traditional Big Three automakers and was a senior executive at former Chrysler Corp. when it narrowly skirted bankruptcy in the early 1990s, said GM was in a much stronger position today than the U.S. arm of DaimlerChrysler (DCXGn.DE: Quote, Profile, Research) (DCX.N: Quote, Profile, Research) was in what he called its "darkest hour."
"You talk about near bankruptcy. I've seen bankruptcy situations. And this ain't one of them," he said emphatically.
GM, which lost more than $4 billion in North America during the first nine months of 2005, announced plans in December to close all or part of 12 North American plants and cut a total of 30,000 blue collar jobs through 2008.
Some financial analysts have criticized the company for failing to move quicker, and cut costs deeper, to return its core operations to profitability. But Lutz said the automaker, which prides itself on big V-8 engines like the one in the glimmering silver Camaro that he showed off on Monday, was moving as fast as it can.
"You can try to move faster and then you get to a point where you have a serious labor disruption, and nobody would like the result of that," he said.
He did not elaborate, but GM held difficult negotiations with the United Auto Workers union last year to close a deal that will allow the company to shave about $15 billion off its $60 billion in long-term health-care costs.
Wagoner suggested on Sunday that GM will be looking for more concessions from the traditionally militant union, ahead of an expected difficult round of contract talks in 2007.
To help keep labor peace, GM could also soon be forced to spend billions of dollars to stave off a potentially crippling strike by UAW workers at Delphi Corp. (DPHIQ.PK: Quote, Profile, Research), its leading part supplier which declared bankruptcy last year.
"Clearly, there's some value here," said Tim Ghriskey, chief investment officer with Solaris Asset management.
"Having said that, there's limited upside because the sales picture is bleak," he said. "This is a company still losing market share and it still doesn't have product attracting growth."
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