BackFord posts record loss, draws $10 bn in credit
Ford posts record loss, draws $10 bn in credit
PremiumDetroit: Ford Motor Co reported a record $14.6 billion full-year loss on Thursday but said it would have the cash to survive the worst downturn in auto sales in decades without a US government bailout.
Ford plans to cut some 2,500 white-collar jobs and draw down its remaining credit line after burning through $5.5 billion of cash as global auto sales plunged.
The automaker posted a deeper-than-expected $5.9 billion fourth quarter net loss. Ford has reported net losses totaling nearly $30 billion over the past three years.
For the year, Ford burned through $21 billion but said it expected that it would be be able to better conserve cash in 2009 if US sales stabilize in the second half as it expects.
The No. 2 US automaker also said it would draw down $10.1 billion remaining on its credit line and defer $2 billion in payments pledged to a trust aligned with the United Auto Workers to add to its cash position in the first quarter.
Ford shares were down 3% in afternoon trade.
Analysts lauded Ford under Mulally with having the foresight to borrow heavily in 2006, before credit markets shut down and auto sales plunged in 2008.
Ford’s captive credit arm, Ford Motor Credit, said it would cut 1,200 jobs, or 20% of its staff. For its auto operations, Ford said it had almost completed 1,300 white-collar job cuts that it began in November.
Suspending the jobs bank had been a condition imposed by the federal government for the $17.4 billion bailout of Ford’s rivals General Motors Corp and Chrysler. GM and Chrysler both had previously announced an end to the program.
Still, Ford was expecting some recovery in the US market in the second half of the year and he expected it would be the first region to show signs of a rebound.
Ford has asked for a $9 billion line of credit from the US government as insurance against a worsening in the global economy. It also expects to receive $5 billion of direct loans from a US program to support improved fuel economy.
Industry-wide US auto sales fell 18% in 2008 and are expected to fall for a fourth consecutive year in 2009, ratcheting up pressure on automakers in the world’s largest and most profitable market.
Ford remains more optimistic than most industry forecasts for 2009, even though it cut its industry-wide US sales forecast to a range of 11.5 million to 12.5 million units including medium and heavy trucks from the range it used in Congressional testimony last year.
The automaker trimmed its first quarter production plan by 30,000 units in North America to 400,000 units, a cut that will add to the considerable pressure on its supply base.
Ford does not contemplate a cash injection for former parts unit Visteon Corp, whose stock has fallen to 16 cents per share.
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