But GM gets more
help and Chrysler tries
to stave off bankruptcy.
By KIMBERLY S. JOHNSON
The Associated Press
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 $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.
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 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.