Mullaly says Ford plans to speed up debt repayment

AP News
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Posted: Dec 18, 2009 4:06 PM

Ford Motor Co. CEO Alan Mulally says the automaker plans to speed up debt repayment as its financial condition continues to improve.

Mulally also told reporters at a briefing Friday on its new vehicles that Ford will keep its advantage over Chrysler and General Motors next year. Ford has gained sales and market share while its Detroit competitors were forced to take government aid and go through bankruptcy protection.

Ford has about $27 billion in debt. Mulally says the company repaid $10 billion this year and has sold $1.6 billion worth of stock.

He says the automaker will accelerate payments as it continues to move toward profitability in 2011.

Ford mortgaged all of its assets three years ago to borrow $23.5 billion. The loans allowed it to avoid bankruptcy and the government aid that GM and Chrysler needed to survive.

"Everybody knows how fast we are getting back to profitability and free cash flow," Mulally said. "Then we'll just accelerate the improvements to the balance sheet."

In November, Ford reported a third-quarter profit of nearly $1 billion and said it would be solidly profitable in two years.

Mulally said the borrowing and improved cash position have allowed Ford to revamp its product lineup so it will soon be the freshest in the industry. He made the statements in the Detroit suburb of Wayne, at a former truck factory being retooled to make the new European version of the Focus compact car.

New versions of the Focus are expected to be in showrooms early in 2011.

Ford's U.S. sales through November are down 19 percent from the same period last year, but that's a smaller drop than the overall market's 24 percent drop. The Dearborn, Mich., automaker has fared far better than GM, with sales down 32 percent, or Chrysler, which has seen a 38 percent decline, according to Autodata Corp.

Mulally said Ford would continue to see a competitive advantage over GM and Chrysler because of its solid products and because it avoided government aid and bankruptcy protection.

"They want to know that not only are they getting great products that will work for them, they want to know that the company is going to be there," he said.

Mulally also said the economy is starting to show signs of improvement throughout the world, slowly moving out of the recession. Yet Ford has still planned conservatively to have growth going forward, he said.