Chrysler LLC chief executive Robert Nardelli told a group of employees this week that the company is headed for a US$1.6 billion loss this year, according to a person familiar with his statements.

Nardelli told a group of engineers and designers that revenue will be less than $63 billion but costs will exceed $64 billion, said the person, who requested anonymity because Chrysler is a private company and no longer has to report its earnings.

Nardelli, the former CEO of The Home Depot Inc., was hired in August by Chrysler's new private equity owner, Cerberus Capital Management LP.

If his prediction is correct, it would be the company's second straight year of losses. Chrysler lost $618 million in 2006, but made $1.8 billion in 2005.

Chrysler spokeswoman Shawn Morgan said the company will not comment on its financial performance because it is privately owned.

Nardelli's statements are similar to those made by Steven Landry, executive vice-president of North American sales, who told a group of Canadian business students last week that the company is likely to lose $1 billion this year as its new leadership tries to cut costs and streamline the automaker's model lineup.

Chrysler, Landry said, is poised to break even next year and make money in 2009 and 2010, and he added that the company plans to ``right size'' itself and reduce its model lineup from 28 to around 20 while focusing on top-quality interiors.

Landry said the automaker will take in about $64 billion in revenue this year but spend about $65 billion.

Chrysler in November announced plans to cut up to 12,000 jobs, just after employees represented by the United Auto Workers ratified a new four-year contract with the company. The cuts include 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008, or about 15 per cent of the company's work force. The cuts came on top of 13,000 Chrysler job reductions that were announced in February.

Chrysler already has said it will eliminate four products through 2008: the Dodge Magnum wagon, the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica crossover and the Chrysler Crossfire sports car.

In the same time frame, Chrysler plans to add two new products: the Dodge Journey crossover and Dodge Challenger sports car, along with two hybrid models, the Chrysler Aspen and Dodge Durango.

Chrysler became a private company this year when Cerberus bought an 80.1 per cent stake from what was then DaimlerChrysler AG.

Nardelli's comments were reported Wednesday on The Wall Street Journal's website.