(SSource: Reuters via CNN)

Tentative agreement, aimed at cutting costs and keeping automaker out of bankruptcy, to be presented to workers for ratification.

Chrysler LLC and the Canadian Auto Workers (CAW) union reached a tentative agreement Friday on a new labor contract intended to cut costs and keep the struggling automaker from bankruptcy, the union said.

The deal, which will be put to CAW-represented workers for ratification this weekend, is one of several agreements that Chrysler needs to reach by next week to win new U.S. government aid and avoid liquidation.

“We were told by Chrysler that they still didn’t have entire deals done to avoid a bankruptcy filing. We urge all the stakeholders in the United States to make equal sacrifices,” CAW President Ken Lewenza told reporters.

Chrysler, which has been kept operating since the start of the year with $4 billion in U.S. government loans, has until the end of this month to clinch an alliance with Italy’s Fiat SpA and win concessions from its bank creditors and major unions or face a cutoff of its government funding.

“We are extremely grateful to the CAW leadership and to its hard-working members for their openness in this challenging environment to create a new strategy that will lead this company on a path to success,” Chrysler vice chairman Tom LaSorda said in a statement.

The tentative contract for Canadian autoworkers with the No. 3 U.S. automaker would leave hourly base pay intact but cut a range of benefits, including an annual Christmas bonus, and add flexibility to work rules that would make it easier for Chrysler to hire temporary workers.

Chrysler will also cut the third production shift at its Windsor, Ontario, minivan plant.

Taken together, the contract changes will save Chrysler an estimated C$240 million in annual labor costs, Lewenza said.