GM, UAW Reach Health Care Deal

General Motors Corp. and the United Auto Workers have reached an agreement that will help the automaker lower its health care costs, GM's chairman and CEO said Monday.

The announcement came as the world's biggest automaker said it lost $1.6 billion in the third quarter and said it was considering selling a stake in its financial arm in a bid to restore its investment grade credit rating.

The tentative agreement on health care is projected to reduce GM's retiree health-care liabilities by about 25 percent, or $15 billion, and cut GM's annual employee health-care expense by about $3 billion, CEO and Chairman Rick Wagoner said. Cash savings are estimated to be about $1 billion a year.

"These negotiations were done in a positive, cooperative, problem-solving spirit," Wagoner told employees at GM headquarters in Detroit. "While it may have taken some time to reach this cooperative solution, I think it was time well-spent."

GM asked the UAW to help it lower its health care costs before its contract with the union expires in 2007. Both parties have been in negotiations since spring.

Also Monday, GM reported a loss of $2.89 per share for the January-September period in contrast to a profit of $315 million, or 56 cents a share, a year ago.

The loss for the third quarter included a charge of $805 million for asset impairments in North America and Europe and restructuring charges of $56 million at GM Europe.

Without the special items, GM's loss amounted to $1.1 billion, or $1.92 a share. But that is still a much larger loss than the loss of 87 cents a share that analysts surveyed by Thomson Financial expected.

Total revenue was $47 billion for the quarter, up from $44.8 billion in 2004.