italian partner

Chrysler’s Italian partner Fiat has the option to buy the trust’s shares, which account for a 45.7 percent stake in the company, and forgo a public offering. But while the executive, Sergio Marchionne, acknowledged the possibility of a direct purchase, he said a stock offering appeared to be the most prudent exit strategy for the retirees.

“I still look at the I.P.O. as the easiest way to monetize it,” Mr. Marchionne said of the stake owned by the United Automobile Workers’ voluntary employee beneficiary association, or VEBA.

Speaking after President Obama’s visit to Chrysler’s Jeep assembly plant in this northern Ohio city, Mr. Marchionne also said that a Chrysler stock offering would probably not be done until 2012.

“I think we need an additional track record of performance,” he said.

The president’s visit came a day after Fiat agreed to pay $500 million to the Treasury Department to acquire the 6 percent ownership stake that American taxpayers have held in Chrysler since it emerged from bankruptcy two years ago.

In addition, Fiat paid $75 million to the United States and Canadian governments for the right to buy the big ownership stake held by VEBA.

Fiat’s deal to buy the Treasury shares will give the Italian company a 52 percent stake in Chrysler, and accelerate the integration of the two automakers. It also concluded the American government’s stewardship of Chrysler, the smallest of Detroit’s Big Three car makers. Mr. Marchionne is the head of both Fiat and Chrysler.

Chrysler and General Motors were rescued from financial collapse by the Bush and Obama administrations after the two companies ran out of operating funds in late 2008.

After the sale of its shares to Fiat, the government will have recouped about $11.2 billion of the $12.5 billion that it invested in Chrysler. The remaining $1.3 billion — which went to the corporate shell of “old Chrysler” — will most likely be written off.

The Canadian government also lent money to Chrysler and continues to hold a 1.7 percent stake in the company. Mr. Marchionne said that Fiat was currently in talks to acquire those shares.

Once that is completed, Fiat will essentially own all the Chrysler stock that is not held by the VEBA.

But while Fiat has the resources to acquire the shares of the health care trust, Mr. Marchionne said such a transaction could be prohibitively expensive.

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Chrysler, the only Detroit automaker to lose money last year, earned $116 million in the quarter, after losing $197 million in the period a year ago. Revenue grew 35 percent, to $13.1 billion, while sales were up 18 percent.

“Chrysler Group’s improved sales and financial performance in the first quarter show that our rejuvenated product lineup is gaining momentum in the marketplace and resonating with customers,” Sergio Marchionne, the chief executive of Chrysler and its Italian partner, Fiat, said in a statement. “These results are a testament to the hard work and dedication of our employees, suppliers and dealers, all of whom are helping Chrysler create a new corporate culture built on the quality of our products and processes, and simple, sound management principles.”

Chrysler said it had $9.9 billion in cash on hand as of March 31, an increase of $2.6 billion in three months, and $13.3 billion in debt.

The results are a milestone for Chrysler, which narrowly avoided liquidation after its decade-long tie-up with the German carmaker Daimler dissolved and a private equity firm, Cerberus Capital Management, failed in its revival efforts. The profit comes almost exactly two years after President Obama forced Chrysler to file for bankruptcy protection and form a partnership with Fiat because he and other officials believed it could not survive on its own.

Chrysler reported operating profits in each quarter of 2010, but each time interest payments to the American and Canadian governments, which totaled $1.23 billion for the year, resulted in losses over all. Chrysler lost $652 million last year.

In its report the company reiterated its previous forecast for net income this year of $200 million to $500 million.

The company plans to significantly reduce its interest payments by refinancing the $7.5 billion in government loans it received before and during its bankruptcy. On Monday, Chrysler said it would repay the loans by the end of June by selling $2.5 billion in bonds and borrowing from new secured credit facilities totaling $5 billion.

Interest payments in the first quarter totaled $348 million, up from $311 million in the period a year earlier. Mr. Marchionne declined last week to say how much Chrysler would save through its refinancing.

Chrysler introduced or revamped 16 models in 2010, and it said increased sales of many of them played a role in its first-quarter profit, as market share increased in the United States and Canada, its two largest markets.

Jesse Toprak, vice president for industry trends and insight at TrueCar.com, said Chrysler still needed to make its vehicle lineup more appealing, particularly in the small-car segments that have become more popular amid rising gas prices.

“The outstanding issue for them is their continued reliance on S.U.V.’s and trucks,” Mr. Toprak said. “They’re on the road to recovery, but there’s much more to be done to really claim that Chrysler is back on their feet and healthy.”

Pickups and other light trucks accounted for 78 percent of Chrysler’s first-quarter sales in the United States compared with about 60 percent for General Motors and the Ford Motor Company.

Some Chrysler dealers began selling the tiny Fiat 500 car this spring, and it plans to bring out more small cars based on Fiat designs and technology within the next several years, but most of its focus since bankruptcy has been on redoing larger models like its Jeep Grand Cherokee and Dodge Durango sport-utility vehicles.

Chrysler remains far less profitable than its domestic competitors. Ford earned $6.6 billion last year and $2.55 billion in the first quarter of 2011. Ford’s sold 3.5 times as many cars and trucks as Chrysler last quarter, and its profit was 22 times as much as Chrysler’s.

G.M., which filed for and emerged from bankruptcy a month later than Chrysler, earned $4.7 billion in 2010. It is scheduled to reveal first-quarter results Thursday.

The United States and Canada own a combined 10.8 percent of Chrysler, which is expected to have an initial public offering later this year or in early 2012. Chrysler is 30 percent owned by Fiat, which plans to pay $1.27 billion for an additional 16 percent stake when the government loans are repaid. Chrysler’s majority owner is currently a trust fund set up to cover the cost of health care for hourly retirees.

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