Saab Reports Deep First-Half Losses; Reassessing Business Plan

Struggling Saab Automobile and its group of companies posts a first-half loss of E224.2 million ($324.4 million), a period during which the Swedish auto maker’s assembly plant was idled for more than eight weeks, and says it will revise its current business plan.

In a financial report issued today by parent-company Swedish Automobile, Saab also raises the possibility it could file for bankruptcy if it cannot secure near-term funding.

However, the auto maker says it currently operates under the assumption that it will continue as a viable entity.

Saab owes money to suppliers, which quit delivering parts earlier this year, forcing the auto maker’s Trollhattan assembly plant to shut down.

It has yet to resume production.

The auto maker has struggled to pay its employees, and today says it has suspended the planned sale of its Spyker exotic sports car business, a divestiture once expected to raise E32 million ($46.3 million).

In addition to the first-half loss, Swedish Automobile says the group’s working capital fell to negative E379.4 million ($548.9 million).

Sales increased 33% to E359 million ($519.4million) from E241.6 million ($349.5million) year-ago, but the cost of building and distributing the cars the company was able to produce in the period wiped out that revenue.

The auto maker also says it foresees a substantial full-year loss ahead.

Saab’s future continues to hinge on successful investment from its new Chinese partners, dealership-giant Pang da and auto maker Zhejiang Youngman Lotus Automobile.

The deal portends E245 million ($350.6 million) in funding for Saab, but remains under regulatory scrutiny.

“It will come as no surprise that this has been an unbelievably tough quarter for this company,” Swedish Automobile Chairman and CEO Victor Muller says in a statement.

“Our business plan is under review pending completion of funding negotiations and to reflect ventures with our future partners Pang Da and Youngman.”

Muller saved Saab from liquidation by a post-bankruptcy General Motors in 2010. However, independence has been rocky for the auto maker, and critics blame its savoir for operating under an overly optimistic business plan.