GM posts huge loss, sets UAW deal - Yahoo! News

Good News - Bad News for GM
GM Posts $1.6 Billion Quarterly Loss
GM Reaches Deal with UAW on Healthcare

Negotiators from the UAW and GM worked frantically over the weekend to come up with a deal over healthcare expenses. GM wanted the UAW to open the contract and make concessions. The UAW expressed a willingness to deal within the context of the contract. At least that was the union's public position. It seems obvious that the union officials know that if they don't deal before the contract expires in 2007, either they will be dealing with GM in bankruptcy court or the non-bankrupt GM will be so broke that the difference won't be significant. No doubt GM was desperate to make a deal and have the deal ready to announce when quarterly financial disclosures were due to be announced today. The alternative would be a stock price in free fall and probably another debt downgrade.

So they came up with a health care deal. What can you make of it Johnny? A hat, a broach, a pterodactyl? It's hard to say. Here's how it is reported at yahoo.com:

The tentative agreement is projected to reduce GM's retiree health-care liabilities by about $15 billion and cut its annual employee health-care expense by about $3 billion before taxes. Cash savings are estimated to be about $1 billion a year, GM said.

Other stories talk about retiree health care expenses cut by 25%.

Now these numbers don't make total sense to me, but it seems to me that if you are losing $1.6 Billion per quarter, and you cut health care expenses, $1 Billion per year, you still have $5 Billion left in annual losses unless you do something else. So far, that something else is to get rid of employee pricing for everybody, and the short term effect of that is to drop sales 57% compared to last year.

GM posts huge loss, sets UAW deal - Yahoo! News