General Motors burned through $10.2 billion in the first quarter as it failed to cut costs fast enough to offset a sharp decline in global sales and was kept afloat by a federal bailout.
Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and tried to run down costly inventories on dealer lots in the United States and Europe.
Chief financial officer Ray Young said there was evidence consumers were scared away from GM cars and trucks because of concern the automaker was headed for bankruptcy.
"You could not offset the revenue implosion that we experienced here," Mr Young told reporters following release of the quarterly results today.
He said GM still hoped to complete a debt restructuring out of court but was ready for bankruptcy if that proved necessary. He said GM was pressing ahead with contingency plans for a quick bankruptcy process, drawing on the experience of Chrysler LLC, which filed for bankruptcy last week.
"We are very, very cognizant of this issue of revenue perishability and how consumers react to the threat of bankruptcy," Mr Young said.
"So that's from our perspective the importance of avoiding bankruptcy at all costs.
But if we have to go through a bankruptcy, the importance of doing it quickly - get in and out very, very quickly - in order to alleviate the concerns of consumers," he said.
Mr Young said GM would make a decision at the end of this month on whether an offer to extinguish $24 billion in bond debt in exchange for new shares had garnered enough support for the company to avoid a bankruptcy filing.
GM lost market share in the quarter as its global sales fell 28 per cent, compared with an industry-wide decline of 21 per cent.
GM posted a first-quarter net loss of $6 billion, compared with a loss of $3.3 billion a year earlier.
Excluding $73 million of one-time net charges, it lost $9.66 per share. That was within the wide range of analysts' expectations.
GM is facing a government-imposed June 1st deadline to reach agreements to overhaul its operations and cut more than $40 billion in debt. To date, the company has taken $15.4 billion in emergency loans from the US Treasury.
Reuters