GM's payments to Delphi melts away operating loss

From Automotive News:

DETROIT -- Delphi Corp.'s operating loss narrowed to $96 million in the third quarter from a loss of $663 million a year earlier, largely because of payments received from former parent General Motors.

The supplier, operating under Chapter 11 bankruptcy for more than three years, swung to a net profit of $5.22 billion from a net loss of $1.17 billion. Again, payments from GM made the difference.

Delphi received $5.69 billion from GM in the third quarter. The funds came in the form of cash as well as GM's assumption of certain unfunded pension liabilities for Delphi's work force.

Revenue fell 17.1 percent to $4.38 billion, primarily because of an 11 percent drop in GM's North American production and Delphi's continued divestiture of noncore businesses.

Excluding the impact of the GM settlement gains, Delphi said it would have posted a third-quarter net loss of $469 million.

Sales to GM represented 31 percent of total sales in the quarter, down from 38 percent a year earlier. Sales to GM in North America alone accounted for 21 percent of Delphi's third-quarter sales, down from 30 percent a year earlier.

Delphi ended the quarter with $1.87 billion in available cash, up from $1.38 billion a year earlier.

I think it's actually very ironic that a company that is teetering seriously close to bankruptcy is the one bailing out another. It's kind of hard as well to believe that GM is really asking for a bunch of extra money when they are putting up significant cash to a company that is already seeking shelter--I realize this is a circumstance where GM is making good on things that it legitimately owed--but in light of all of these things going on, the logic seems a little shaky, but so is everything that GM seems to do.

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GM's payments to Delphi melts away operating loss

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