Saab files for reorganisation as it seeks to secure future

SWEDISH CARMAKER Saab has filed for reorganisation as it seeks to survive as an independent brand. The announcement followed an extraordinary board meeting on Thursday to discuss the future of the loss-making carmaker, which is currently owned by General Motors (GM).

In its restructuring plan submitted to the US Treasury this week, GM said it planned to make Saab an independent business within 12 months.

Saab managing director Jan Ake Jonsson said the reorganisation was “the best way to create a truly independent entity that is ready for investment”.

The Swedish government has consistently refused to invest state money into the car firm, fearing it would set a precedent for other struggling companies.

Saab employs some 4,100 people in Sweden, 3,700 of whom work at its Trollhättan plant. An estimated 15,000 domestic jobs would be at risk if the company closed. Sales at Saab in 2008 were down 25 per cent on the previous year.

In the Republic 19 new Saab cars were licensed in January compared to 312 during the same month in 2008, according to industry data. Overall, new car registrations for the year until last Wednesday were down 61.6 per cent in the Republic compared with 2008.

Saab is distributed in Ireland by the OHM Group, which also looks after the Jaguar, Seat, Chrysler and Dodge franchises in Ireland.

Saab said the “reorganisation is a self-managed, Swedish legal process headed by an independent administrator appointed by the court who will work closely with the Saab management team”.

Mr Jonsson said: “We explored and will continue to explore all available options for funding and/ or selling Saab, and it was determined a formal reorganisation would be the best way to create a truly independent entity that is ready for investment.”

Saab has not made a profit since 2001 and the court filling estimates its losses for 2008 and 2009 at about three billion Swedish kroner (€270 million).

Last month, Bob Lutz, GM's outgoing vice-chairman, told The Irish Times: "The definition of insanity is doing the same thing over and over again and expecting a different result. Saab has lost millions and millions of dollars . . . this cannot go on. At a time of economic hardship, you owe it to people to look at things like this. They keep telling us that the next model will be a success but it doesn't happen."

The reorganisation of Saab comes as fellow Swedish car brand Volvo is implementing a cost-cutting plan. Volvo is also loss-making and has been put up for sale by its US parent Ford. It employs about 20,000 people and cut 4,000 jobs last October.

The Saab restructuring is part of the wider turbulence afflicting US car manufacturers, particularly GM and Chrysler.

GM said on Tuesday it would try to borrow up to $16.6 billion more from the US government, on top of the $13.4 billion it had already received. GM also plans to cut 47,000 jobs and reduce the number of its models. Its SUV brand, Hummer, is also up for sale.

The latest GM viability plan states that if no buyer is found, the brand will be “phased out” by no later than 2010. – (Additional reporting: Reuters/Bloomberg)