GM posts $6B Q1 loss, burns $10.2B in cash

DETROIT -- GM said it lost $6 billion in the first quarter, burning through $10.2 billion in cash. Revenue fell by 47% to $22.4 billion, and U.S. market share slid nearly 4 percentage points to 18.4%.

Global market share also fell, and fears over GM's health are spreading globally, said Chief Financial Officer Ray Young, who pointed out that even customers in Brazil are expressing concerns about buying GM cars.

The company can cut costs for only so long, Young said. "Once you start losing revenue, you get yourself into a vicious circle in which you cannot recover," he said on a conference call.

GM has been operating on $15.4 billion in federal loans and needs to finish its restructuring by June 1 or it could end up in Chapter 11. The government has said if the automaker can't slash its debt, renegotiate its labor contracts and make other major strides toward turning the company around, GM won't get any additional funding.

Young said GM will also have a tough second quarter, because many of its plants will be closed for several weeks to help cut dealer inventories. GM books revenue when cars are produced, not when they are sold at the dealership.

GM's debt is climbing. The automaker owes $54.4 billion to various parties, including the U.S. government. Young expects GM to need an additional $2.6 billion in federal loans this month and $9 billion more later this year.

If GM does end up in Chapter 11, Young said it's imperative the company get through the process quickly.

Others think bankruptcy is the only way out. "I think bankruptcy is highly likely, not because the losses are so bad, but because everyone has realized that this company needs fundamental restructuring," said Douglas Baird, a University of Chicago law professor who specializes in bankruptcy cases.

Although huge, the $6 billion loss was nowhere near GM's worst. The auto giant lost $39 billion in the third quarter of 2007, mainly because of a write-down for unused tax credits.