Chrysler loses money in 2010 but gives performance bonuses anyway
Chrysler lost $650 million in 2010, primarily as a result of high interest payments on its government loans.
It's a far different result from the other automaker that received federal bailout loans, General Motors, which posted a healthy profit in 2010. And GM paid back a significant portion of its loans from cash reserves and proceeds from its Initial Public Stock Offering.
But Chrysler is a much smaller company than GM, and its sales were still weak last year. That means less revenue to lower the debt burden.
Chrysler's CEO Sergio Marchionne says, "We’ve got more than a billion in interest costs a year, which are effectively chewing up the operating profits that we’ve got."
Marchionne says he hopes to secure private loans to pay off the federal loans by the end of this year.
On the plus side, Chrysler has entered the new year with 16 new or significantly remodeled vehicles, just as U.S. auto sales are improving.
Despite not being able to turn a profit, Marchionne says the company met or exceeded all of its targets last year. He says everyone pitched in to help Chrysler refresh its vehicle lineup in record time, and implement a new cost-saving manufacturing system.
"I think it would been absolutely inexcusable on our part not to recognize what our people have done," he said during an earnings conference call with analysts and media.
The publication Automotive News reports Chrysler UAW workers will get payments of $750 each.
GM workers are expected to get actual profit-sharing checks. GM releases its fourth quarter and full 2010 year results later in February.
Ford workers will get an average $5,000 each after the company posted its best profit in 11 years.