(Adds detail, analyst comment)
CHICAGO, March 22 (Reuters) -Corp. and bankrupt former subsidiary Corp. will offer early retirement incentives to more than 125,000 factory workers, the companies said on Wednesday, after reaching a cost-cutting deal with the United Auto Workers union.
Shares of GM were up over 2 percent on the New York Stock Exchange in response to the deal. Shares of, which trade on the over-the-counter Pink Sheets market, were down slightly.
The deal, which capped a week of intensive negotiations in Detroit, moves the world's largest automaker toward its goal of cutting 30,000 jobs by 2008 and helps avert the threat of a strike at Delphi that could have crippled GM and cost the automaker $5 billion per month.
The UAW has not yet detailed the buyout package, but GM said the union would release that information.
GM provided no estimate for the cost of the buyouts but said it would recognize associated charges in 2006. GM last week raised its estimated exposure to Delphi to a range of $5.5 billion to $12 billion.
Analysts said the deal, while positive, did not entirely remove the threat of a strike at Delphi, which remains in talks aimed at reducing its own payroll costs.
"The deal still leaves a lot of questions, and is less than what people were looking for," Morningstar analyst John Novak said. "We would have liked to have seen a comprehensive deal at Delphi. The fact is, there is still the overhang of a potential strike out there."
The job cuts come as GM, which posted a $10.6 billion loss in 2005, struggles to cut its fixed costs and halt a slide in market share.
The company, which remains the world's No. 1 automaker by unit sales, has been hurt by the waning popularity of profitable sport utility vehicles, high commodity costs and the burden of its pension and health-care obligations.
Delphi said about 13,000 of its 24,000 UAW-represented workers would be eligible for the early retirement incentives, including a one-time payment of $35,000.
The Troy, Michigan-based company also said that about 5,000 of its workers would have the opportunity to return to factory jobs with GM, which spun off Delphi in 1999.
GM will fund the lump-sum payments and provide retirement benefits for any Delphi workers that return to its payroll, said GM spokeswoman Katie McBride.
Early retirement incentives will also be offered to all of GM's 113,000 factory workers, she said.
Of that total, 36,000 are currently eligible to retire under the UAW contract, while another 27,000 are close to 30 years of experience and will be offered special incentives, McBride said.
If too many workers in a particular plant opted to take the buyouts, the existing contract between GM and the union provides a seniority-based system to determine who would be eligible.
DELPHI STILL NEGOTIATING
Delphi, which filed the biggest bankruptcy in U.S. automotive history in October, has said it must slash wages, benefits and jobs to reorganize its struggling U.S. operations.
The company is still negotiating with the union over which of its factories will remain in operation and how its overall wage and benefit levels will be reduced after bankruptcy.
Delphi's participation in the GM-led buyout deal is subject to approval by federal bankruptcy court.
The auto parts supplier said on Wednesday that it still planned to file a motion to have its existing labor contracts voided by a bankruptcy judge on March 31 if it did not get a comprehensive deal with its unions.
Shares of GM, which sold off last week after the automaker delayed filing its annual report with securities regulators, were up 2 percent, or 43 cents, to $22.43. Shares of Delphi were down 5 cents at 84 cents.
GM's stock has gained about 6 percent since the start of the week as traders reacted to indications that the automaker was closing on a buyout deal with the UAW. (With reporting by Jui Chakravorty in Detroit)