The pact will set up a union-controlled health care trust fund, freeing GM from roughly $51 billion in health care liabilities for retirees in return for a large upfront cash payment. It sets up a two-tier wage structure, allowing GM to pay new-hires lower wages and benefits than existing works, and it also includes guarantees for the production of certain vehicles in the U.S., providing job security for workers.
In a report, Citigroup analyst Itay Michaeli raised his target price on GM shares to $46 and lowered his risk profile to "high" from "speculative," citing "GM's improving business and free cash flow profile."
Media reports indicate that Chrysler's agreement follows a similar framework as GM's, and more details are expected to emerge as the union promotes to deal to its members. A spokesman for Chrysler declined to discuss the details of its agreement, and a spokesman for the UAW could not be reached.