General Motors Co posted a quarterly loss on Monday but said stabilizing sales since its bankruptcy would allow it to begin paying down $8.1 billion in debt to the United States and Canada next month.

GM said it expected to repay its government debt by the end of 2011 and could opt to move faster by refunding money left over in an account created by the Obama administration to finance GM's fast-track sale out of bankruptcy in July.

Analysts said GM's third-quarter results underscored the pressure facing the largest U.S. automaker despite sharply lower debt and operating costs and a $50 billion financing package that has made the U.S. government a 61-percent owner.

They are still on life support as a business and they are going to continue to be, said Mirko Mikelic, a portfolio manager at Fifth Third Bank in Grand Rapids, Michigan.

GM's third-quarter sales dropped 26 percent to $28 billion. It posted a net loss of $1.2 billion for the period from its July 10 bankruptcy emergence to the end of September.

There are some signs of stability, Chief Executive Fritz Henderson said. But when you come away from it, we lost money. It's certainly not satisfactory.

But Henderson also said the financial damage to GM's business from a volatile quarter that saw it transferred to U.S. government ownership had been less damaging than feared.

Henderson's predecessor, Rick Wagoner, was asked to step down by the White House after resisting plans for a bankruptcy that GM had long argued would hurt consumer confidence.

The underlying business, relative to the projections that we had going into bankruptcy, has actually performed better, Henderson said.

'SURPRISING' AND 'DISAPPOINTING'

Bolstered by its bailout, GM ended September with almost $43 billion in cash compared with $14 billion a year earlier.

That included $17.4 billion in a special account created with bankruptcy financing provided by the U.S. government. GM said it had allocated $8.1 billion from that taxpayer-funded account to pay down its government debt.

GM's results were not prepared according to generally accepted accounting principles and were not comparable to past results. GM has lost $88 billion since 2005.

The company's global share of auto sales slipped to 11.9 percent in the third quarter compared with 13 percent a year earlier. In the United States, where the cash for clunkers sales incentives helped lift a sagging market, GM's U.S. share slipped to 19.5 percent from 24.3 percent a year earlier.

Aaron Bragman, an analyst with IHS Global Insight, called the GM results surprising and a little disappointing.

The bankruptcy was effective in some ways, the debt is a lot less, the structural costs are dramatically less, but why are they still turning in a loss? Bragman said. We expected better.

GM said its international operations including its European Opel unit had earnings before interest and taxes of $238 million for the shortened third-quarter period. By contrast, GM's North American operations posted a loss of $651 million.

In a move that has strained relations with its German union and Germany's government, GM's board reversed course earlier this month and decided to keep Opel.

The German government had pledged to contribute 4.5 billion euros ($6.7 billion) to finance a deal that would have sold Opel to a Russian-backed group led by Canadian auto parts supplier Magna International.

GM is readying a new restructuring plan for Opel that will rely less on help from Germany's government.

GM said it would repay Berlin the remaining $600 million in bridge loans for Opel by the end of November. It said its European operations were carrying $2.9 billion in cash as of the end of September.

Separately, GM plans to begin paying back $6.7 billion of loans from the U.S. Treasury and $1.4 billion from the governments of Canada and Ontario through quarterly payments totaling $1.2 billion.

A congressional oversight panel has said the U.S. government is unlikely to recover all of the $50 billion financing it provided GM.

Henderson said it was an open question as to whether U.S. government-imposed restrictions on executive compensation would lift with the repaying of the government loans.

GM is in the process of revaluing its balance sheet after bankruptcy. That process of readying fresh start accounting, which is expected to take until the first quarter of next year, is a step toward an eventual IPO.

In a move that would represent its first return to the capital markets, GM also plans to get a revolving line of credit in preparation for the IPO, Henderson said.

All of our shareholders want to sell shares, Henderson said. Creating a market for an orderly trading of the stock is important.

(Reporting by Kevin Krolicki, editing by Gerald E. McCormick, Dave Zimmerman)

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