- The Washington Times - Saturday, April 25, 2009

DEARBORN, Mich. | Better-than-expected earnings from Ford raised hopes Friday that the automaker’s restructuring and new products may be enough to spare it from a federal bailout, while General Motors sought more government help and Chrysler raced to avoid bankruptcy.

Ford still lost $1.4 billion from January through March, but that was less than expected, and executives said the outlook for future sales was good enough to increase production of its most popular vehicles.

Ford Motor Co. has taken steps over the last few years to avoid government intervention: cutting costs, focusing on its core brands and introducing new vehicles and advanced features.

“Ford is building the best stuff it’s ever made in terms of quality rankings and critical reviews,” said Aaron Bragman, analyst of IHS Global Insight. “The vehicles are sufficiently improved and people are starting to realize that.”

While Ford tries to go it alone, federal officials are questioning every penny spent by General Motors Corp. and Chrysler LLC, which are both subsisting on government loans.

On Friday, the Treasury Department said it loaned another $2 billion to GM, bringing the automaker’s total to $15.4 billion. Chrysler has borrowed $4 billion and could get $500 million more so it can keep running while it restructures.

But Ford, under the leadership of former Boeing Corp. CEO Alan Mulally, mortgaged all of the automaker’s assets - including the trademark blue logo - a few years ago, when loans were easier to get from the private sector.

As of March 31, Ford had $21.3 billion in cash to help it survive the worst market for U.S. auto sales in 27 years.

The company said Friday it had spent just $3.7 billion of its cash during the first three months of this year, far less than the $7.2 billion it burned in the fourth quarter of 2008. Investors sent Ford’s shares up 11 percent.

“I think the important comparison for us is, ‘Are we improving versus the fourth quarter?’ ” said Chief Financial Officer Lewis Booth. “Because the fourth quarter, things were really dreadful.”

He said cost cuts and better pricing for its vehicles helped the company narrow its losses from $5.9 billion in the fourth quarter, and he expects continued improvement for the remainder of the year.

Ford said it was able to charge more for its vehicles, which are now coming loaded with features such as electronic blind-spot detection and technology that links drivers’ cell phones and MP3 players to a voice-activated command center.

Chrysler, on the other hand, spent more on sales incentives than any other automaker, averaging about $5,000 per vehicle in March, according to Edmunds.com.

With a government-imposed deadline for massive restructuring less than a week away, Chrysler and federal officials held out hope that they could keep the automaker out of bankruptcy court, according to two people briefed on the talks.

Chrysler and the Treasury Department are preparing paperwork for bankruptcy filings - one as a reorganization in Chapter 11 with government funding and the other as a liquidation if no government money is available - both people said, speaking on the condition of anonymity because the fast-moving negotiations are private.

Chrysler has until Thursday to work out a joint venture with Italian automaker Fiat SpA. GM has until June 1 to make dramatic cuts.

President Obama has dismissed GM and Chrysler’s viability plans as overly optimistic, given the current sales climate and the company’s sluggish pace of restructuring.

While not discounting Ford’s problems, analysts said the company has been more aggressive in key areas where the administration found fault with GM and Chrysler.

For instance, GM was faulted for its unwieldy size, with eight different brands. Ford sold its Aston Martin, Land Rover and Jaguar lines in 2008. It also reduced its stake in Mazda and is currently looking to sell Volvo. That would allow Ford to focus on Ford, Lincoln and Mercury.

Chrysler was also faulted for focusing on sport utility vehicles and minivans, leaving it ill-prepared for high gas prices. Ford is rolling out a mix of fuel-efficient vehicles that have been well-received by consumers who may be concerned about the uncertainty surrounding GM and Chrysler.

One day after GM said it would temporarily close 13 North American plants for up to 11 weeks this summer to slash inventories, Ford said it expects its production to increase 19.5 percent from the first quarter.

Ford said it’s on track to break even or turn a profit in 2011. But the company isn’t squeaky clean. It still has debt, an underfunded pension plan and a primary market - the United States - where consumers are skittish about buying a new car amid mounting job losses in a recession.

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