UAW REACHES DEAL TO SAVE CHRYSLER
DETROIT — Chrysler cleared a major obstacle to its survival yesterday when it reached a tentative deal for concessions with the United Auto Workers union.
The firm is days from Thursday’s federal deadline to win concessions from unions and debt holders and form an alliance with Fiat, or face near-certain liquidation.
The UAW announced the deal last night, calling the concessions painful, but saying it takes advantage of the second chance given Chrysler.
The deal is seen as a key piece of Chrysler’s survival plan, and it’s noteworthy that the UAW said Fiat was involved in the pact.
“The provisional agreement . . . helps to meet the guidelines set forth by the US Treasury Department,” Chrysler Vice President Al Iacobelli said. “As a result, Chrysler can continue to pursue a partnership with Fiat.”
The remaining hurdles involve concessions from the holders of $6.9 billion in Chrysler secured debt, and terms of the alliance with Fiat.
The bondholders, the company and the feds remain far apart in swapping equity in the company for much of the debt.