US SHARES rose yesterday after Ford said it lost $1.4 billion in the first three months of this year, but had enough cash to survive a year without a government bailout. The Ford figures, which were better than analysts had predicted, came as the other two big US car manufacturers, General Motors and Chrysler, moved closer to bankruptcy.
The US Treasury said yesterday it lent GM a further $2 billion this week for working capital, bringing the cost of the US taxpayers’ help to the company to $15.4 billion.
GM has until June 1st to complete a restructuring plan but Chrysler faces bankruptcy next Thursday unless it can agree an alliance with Italian manufacturer Fiat.
The Obama administration has agreed to continue lending money to GM and Chrysler, but only if the companies agree to swap part of their large debt for equity, cut unprofitable models, reduce labour costs and complete other restructuring steps.
A US government report revealed earlier this week that the treasury was prepared to provide GM with up to $5 billion more in federal loans and Chrysler with up to $500 million more in support.
Ford, the only one of the big three car manufacturers not to accept a federal bailout, said it had $21.3 billion in cash as of March 31st. The company went through $3.7 billion of its cash reserves since the start of the year, compared to $7.2 billion in the fourth quarter of 2008.
“Clearly, these continue to be challenging days for the global auto industry. I remain encouraged by the progress Ford is making to allow us to operate through the downturn and emerge as a lean, globally integrated auto maker poised for profitable growth when the economy rebounds,” Ford’s chief executive Alan Mulally said in a statement.
“Our results in the first quarter reflected the extremely difficult business environment and weak demand for autos around the world. Despite the challenges, Ford made strong progress on our transformation plan by gaining share with strong new products, slowing operating-related cash outflows, reducing outstanding debt, lowering our structural costs and reaching new agreements with the UAW [trade union],” he said.
