Chrysler Requests $5 Billion More in Federal Bailout Funds

Chrysler asked government officials today for an additional $5 billion in loans to ride out the deepening economic slump.

In its viability plan submitted to the Treasury Department, the automaker also said it would reduce its workforce by 3,000 employees and discontinue three vehicle models--the Aspen, Durango and PT Cruiser. The company plans to reduce fixed costs by $700 million, reduce one shift of manufacturing, produce 10,000 cars and trucks and sell $300 million additional non-earning assets in the coming year.

"We believe that Chrysler LLC will be viable based on the updated assumptions contained in this submission, and that an orderly restructuring outside of bankruptcy, together with the completion of our standalone viability plan, enhanced by a strategic alliance with Fiat, is the best option for Chrysler employees, our unions, dealers, suppliers and customers," said Chrysler chief executive Robert L. Nardelli in a statement.

In the company's original Dec. 2 plan to Congress, the automaker said it needed $7 billion to survive. Treasury gave Chrysler $4 billion in loans.

Now the company is asking for the remaining $3 billion, plus an additional $2 billion.

"We believe the requested working capital loan is the least-costly alternative and will help provide an important stimulus to the U.S. economy and deliver positive results for American taxpayers," said Nardelli.

Because consumers are having difficulty getting credit, Chrysler estimates seasonally adjusted annual sales will average 10.8 million vehicles this year until 2012. In recent years, that rate hovered around 16 million.

This translates into about $18 billion in lost revenue and a $3.6 billion decline in cash flows during the four years, according to Chrysler. Chrysler is also planning to launch 24 new fuel-efficient car models in the next 48 months.