GM Loses $6 Billion in First Quarter

As General Motors (GM) gets closer to its government-imposed June 1 deadline for reducing debt, its bleak first- quarter earnings and 21% drop in sales stand as further proof of a tough road ahead.

GM reported it lost $6 billion in the quarter, or $9.78 per share from the same period a year prior, before Thursday's opening bell. One year ago the company was already losing money, but only $3.3 billion or $5.80 per share.

Adjusted losses excluding one-time charges totaled $9.66 per share, compared to last year's loss of 67 cents per share.

GM burned through $10.2 billion of its cash reserves during the quarter, translating to $113 million per day. As of March 31, the company had $11.6 billion worth of untapped liquidity.

"Our first-quarter results underscore the importance of executing GM's revised viability plan, which goes further and faster to lower our break-even point," said Fritz Henderson, GM's newly-appointed CEO in a company statement.

In order to continue operations, GM has requested $11.6 billion more in government aid. This is in addition to the $15.4 billion Uncle Sam has already loaned the company. 

However, many say that even with more cash infusions, the auto company will not be able to restructure outside of bankruptcy. Meanwhile, Henderson maintains that bankruptcy is a "probable" option for the company, but not inevitable.

GM faces the same problem that drove Chrysler into bankruptcy: bondholders and debt. GM has made an offer to swap its lenders equity in the company for $27 billion in debt. As with Chrysler, it is unclear if the lenders will see this as a desirable deal given the state of the automobile industry as a whole.

Since last year, shares of GM have tanked by more than 90%, forcing the the company to consider a reverse stock split in which every 100 shares would be converted into one share. This would leave bondholders as 10% owners and shareholders as 1% owners of the company.

Later on Thursday, GM will meet with the United Automobile Workers union in hopes of finding a way to cut labor costs. Under the terms of GM's most recent restructuring plan, the UAW's retiree health care program would own more than a third of the new GM.

Other restructuring efforts GM has already laid out include selling its Saturn, Saab and Hummer brands, and closing its Pontiac division altogether. The company also plans to close 13 plants and slash more than 21,000 factory jobs.