Chrysler reported net losses of nearly $4 billion since it emerged from bankruptcy last year, but it had an operating profit in the first quarter and affirmed that it was on track to break even in 2010.

Chrysler posted a $197 million first-quarter net loss on Wednesday, but it had a $143 million operating profit and its cash flow turned positive due to sweeping cost cuts made during its 2009 bankruptcy.

But the accumulated losses since it emerged from a U.S. government-financed bankruptcy in June under management control of Italy's Fiat SpA underscored continuing pressure for Chrysler, which has been battling to stabilize U.S. sales while racing to revamp an old, gas-guzzling lineup.

Chrysler posted a $3.8 billion net loss from June 10 through the end of 2009.

IHS Global Insight analyst Rebecca Lindland said Chrysler had done a very good job on the balance sheet side of the business including shoring up its cash position.

But on the product side of the business, Chrysler continues to flounder and they need to address it right away, Lindland said.

Returning the 85-year-old Chrysler to profitability could pave the way for Fiat to launch an initial public offering of the U.S. carmaker, which was down to its last dollars before some $14 billion in U.S. taxpayer funding. The U.S. Treasury has an 8 percent equity stake.

Chrysler's turnaround is also critical for Chief Executive Sergio Marchionne's plan to spin off Fiat's carmaking operations from the Italian industrial group's divisions that make trucks and tractors.

The first full accounting of Chrysler's financial performance as a leaner company came as its Italian partner Fiat introduced its first strategic plan since its marriage to Chrysler.

2010 TARGETS ACHIEVABLE: CEO

The No. 3 U.S. automaker had $7.4 billion in cash available at the end of March, up from $5.9 billion at the end of 2009. It also could draw on $2.4 billion of U.S. and Canadian loans if necessary.

This positive operating result in the first quarter is a concrete indication ... that the 2010 targets we have set for ourselves are achievable, Marchionne said in a statement.

We are also generating cash to finance the investments being made in our product portfolio and brand repositioning, Marchionne said.

Chrysler expects negative cash flow of $1 billion for the full year. It expects to at least break even on an operating basis in 2010.

Chrysler's financial results come two weeks after bigger rival General Motors Co reported a $4.3 billion net loss from its own emergence from a government-supported bankruptcy in July through the end of 2009.

The losses for Chrysler and GM stand in contrast to Ford Motor Co, which posted a 2009 profit that surprised analysts. Ford expects a 2010 profit and a solid profit next year after avoiding the bankruptcies that snared its rivals.

Analysts expect Ford to report a first-quarter profit when it releases results next Tuesday. GM expects to report its first-quarter results in mid May.

Fiat acquired an initial 20 percent stake in Chrysler and operational control in return for providing Chrysler with its fuel-efficient technology and platforms. Fiat's stake can increase to 35 percent as it meets restructuring goals.

But almost a year into its U.S. taxpayer-funded rescue, Chrysler's sales still lag the industry, pressured by a dearth of new products and a lineup long starved of investment under previous owners Daimler AG and Cerberus Capital Management.

Chrysler was the only major automaker to post lower U.S. sales in the first quarter -- reporting a 5 percent drop from the same period in 2009 while the industry rose 16 percent. As a result, its U.S. market share fell to 9.2 percent in the quarter from 11.2 percent in the same period a year ago.

By contrast, GM's first-quarter sales rose 17 percent.

Chrysler is counting on a new generation of Fiat-based small cars and fuel-efficient vehicles, starting with the 500 small car in December, to revitalize its aging, truck-heavy lineup and win back trust among U.S. consumers.

In delivering a five-year rescue strategy for Chrysler in November, Marchionne said Chrysler would break even on an operating basis this year and on a net basis in 2011, and would repay government loans by 2014.

Marchionne's plan projects a more than doubling of Chrysler sales to 2.8 million units as it rolls out 21 new models over the five-year period, including a dozen on Fiat platforms.

(Reporting by Soyoung Kim and David Bailey; Editing by Derek Caney and Maureen Bavdek)

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