American Axle sees 2009 profit

By Soyoung Kim

DETROIT (Reuters) - American Axle & Manufacturing Holdings Inc (AXL.N: Quote, Profile, Research, Stock Buzz) has enough liquidity to restructure its business over the next year and a half and is looking to return to profitability in 2009, Chief Executive Dick Dauch said on Monday.

Dauch, speaking to the Reuters Autos Summit in Detroit, said more than half of the nearly 2,500 hourly and salaried workers the company has targeted to cut have left the company through buyouts and early retirements and the supplier is on track to release the rest before the year-end.

About 3,650 U.S. hourly workers represented by the United Auto Workers ratified a contract in May that cut hourly wages by nearly 50 percent and allowed American Axle to close three U.S. plants.

American Axle expects $300 million in annual savings from the agreement. It ended a three-month strike that had idled at least 30 plants at key customer General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) due to parts shortages, and contributed to American Axle's first-half net loss of $671.3 million.

"We have no more labor issues -- 2008 to 2012. Labor is no longer a restricter for us," Dauch said. "Our break-even

will be significantly reduced, get back to profitability in 2009."

U.S.-based automakers and suppliers have faced scrutiny over whether they have adequate liquidity to ride out a deep downturn in U.S. auto sales that have fallen to their lowest level in 15 years.

The financial market turmoil in the wake of Lehman Brothers Holdings Inc's LEH.N bankruptcy makes it more challenging to raise capital, Dauch said. However, the $850 million in debt it had raised over the past years is adequate to finance its restructuring over 12 months to 18 months, he added.

"We all know how tough it is for capital access and credit markets. This just makes it more realistic. But we've already done what we had to do," Dauch said.

American Axle's only debt to come due this decade is a revolving credit facility in 2010. The company said it could consider applying for a part of the $25 billion low-interest loan program set up in the energy bill last year.

The U.S. Congress has not yet approved funding for that loan program, or decided what types of projects the loan proceeds might be used for.

"From a short-term perspective, our company has what it needs," Chief Financial Officer Michael Simonte said.

"Should there be some low cost government financing that becomes available, we will look at it," Simonte said.

GM FUNDING KICKS IN

American Axle plans to cut more than 2,100 U.S. hourly jobs, something permitted under its four-year agreement with the UAW, and also plans to eliminate 350 salaried positions.  Continued...