Chrysler, UAW, Fiat in Deal on Concessions

Updated from Sunday, April 26

By Tom Krisher

DETROIT -- Chrysler cleared another major obstacle to its survival Sunday when it reached a tentative deal on concessions with the United Auto Workers union, helping it move closer to inking a vital alliance with Italy's Fiat Group.

The troubled automaker is just days away from a Thursday U.S. government deadline to gain concessions from its unions and debtholders and link up with Fiat or face almost certain liquidation. White House economic adviser Larry Summers said Sunday the Obama administration is holding out hope that Chrysler can avoid bankruptcy court.

The UAW late Sunday called the concessions painful but said the deal takes advantage of the Obama administration giving Chrysler and its workers a second chance. The administration in February rejected Chrysler's restructuring plan and gave the Auburn Hills, Mich., automaker until April 30 to make further cuts and arrange to take on Fiat as a partner.

The UAW agreement is seen as a key piece of pulling Chrysler's plan together, and it's noteworthy that the UAW said Fiat was involved in the deal.

"The provisional agreement provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the U.S. Treasury Department," said Al Iacobelli, Chrysler vice president of labor relations, in a statement. "As a result, Chrysler LLC can continue to pursue a partnership with Fiat SpA."

Separately, Canadian Auto Workers members on Sunday ratified a concessionary deal which CAW President Ken Lewenza said makes labor costs competitive with non-unionized Toyota in Canada. The two labor agreements now leave concessions from the holders of $6.9 billion in Chrysler secured debt and the alliance with Fiat as the remaining hurdles to Chrysler qualifying for additional government aid.