Chrysler talks progress, GM draws $2 billion U.S. loan

By David Bailey and John Crawley

DETROIT/WASHINGTON (Reuters) - Chrysler's lenders and a Canadian union continued talks on Friday with less than a week to a U.S. government deadline to cut deals, as General Motors Corp drew $2 billion more in government aid.

GM has been operating under $13.4 billion of emergency loans from the U.S. government. The draw adds working capital for the automaker. The U.S. Treasury could lend another $3 billion to GM.

The administration has not yet extended new money to Chrysler, which has been operating on $4 billion of emergency loans, but officials said they were working around the clock to avert a Chrysler bankruptcy filing and facilitate an alliance between Chrysler and Italy's Fiat SpA.

The struggles of its two U.S. competitors overshadowed Ford Motor Co results on Friday. Ford, which has not sought emergency government loans, posted a $1.4 billion loss that was less than analysts had expected and said it was on track to at least break even in 2011.

Ford also said its cash burn rate was substantially lower in the first quarter than it had been in the two proceeding quarters and was likely to decrease further as the year progressed and its shares soared as much as 20 percent.

But Chrysler remained the main focus of the North American auto sector. It faces an April 30 deadline to reach deals that would cut its debt, labor costs and cement an alliance with Fiat to satisfy the Obama administration.

Chrysler has been operating under $4 billion of emergency U.S. government loans and would need to complete those agreements to maintain its funding and receive more. Without additional support, Chrysler could liquidate.

A critical part of the Chrysler restructuring is reducing about $7 billion of first-lien secured debt generated when the automaker broke away from Daimler AG in 2007. Daimler retained a nearly 20 percent stake in Chrysler.