Delphi puts the $1bn bang in bankrupt

Chapter 11 auto parts supplier Delphi Corporation disclosed last month that it lost more than $1.1 billion in December. Delphi, a former General Motors (GM) subsidiary that filed for bankruptcy in early October, is required to file monthly financial reports with the US Bankruptcy Court.

It said its financial performance had rapidly deteriorated because of production cuts at GM, rising commodity prices and other materials and non-competitive wages and labour agreements that prevent the company shedding unprofitable businesses. The company reported revenues of $1.4 billion in December with 58 per cent coming from GM.

These results are unaudited and compare with a net loss of $127 million on sales of $2.9 billion during the period from 8 October to November 30. Delphi is also to accept a $950 million non-cash charge for 2005 to cover asset write-downs.

Delphi is talking to both GM and the major unions about a possible bailout deal that would see a financial injection from GM in return for union agreement to sharply reduced wage and benefit levels.

The company is due in court again later this month, at which point it may ask for labour contracts to be nullified if no agreement is reached.

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