Chrysler may crash without loan

Detroit - Chrysler needs immediate federal help or its cash could fall short of the amount needed to stay in business, CEO Robert Nardelli told the Senate Banking Committee on Tuesday.

At the end of the third quarter, Chrysler had $6.1bn in cash, but during that July-September period, it spent $3 bn more than it took in, Nardelli told senators questioning his company's request for government aid.

Nardelli, Ford CEO Alan Mulally and General Motors CEO Rick Wagoner appeared before the committee in Washington to persuade lawmakers to make $25bn in loans to help the automakers get through the worst sales slump in a quarter century.

Nardelli said the automaker needs immediate federal help or its cash could fall short of the amount needed to stay in business by the end of the year.

"We are in a very fragile position," he said.

The Auburn Hills-based automaker needs $4bn to $5bn per month to pay salaries, bills from parts suppliers and its other costs, Nardelli said. If Chrysler burned $1bn in cash in October, it already is close to the top end of that minimum cash requirement.

Experts say an auto company that falls below its minimums must choose not to pay some bills and runs the risk of parts suppliers demanding cash on delivery for their goods. In a worst-case scenario, suppliers could stop shipping parts and creditors could seek involuntary bankruptcy.

Including the $3bn Chrysler burned in the third quarter, Nardelli said the troubled automaker went through $5bn in the first nine months of the year.

He also told the committee that the reorganisation costs if Chrysler goes into bankruptcy protection would be higher than if the government gives it a bridge loan, and Chrysler cannot be confident that it can emerge from bankruptcy.

The remarks are the first glimpse at the automaker's current financial condition, which many believed to be dire. Chrysler is a private company and does not have to make its finances public.

- AP