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Ford Cools Burn Rate
The struggling carmaker kept hope alive with improved cash conservation despite nasty quarter.
Ford's cash burn rate cooled during the 2008 fourth quarter, and the automaker it expects it to ease even more in 2009.
On Thursday, the struggling automaker reported glimmers of hope. Even though it lost $5.9 billion in the last three months of 2008, and its sales were 35.8% below the previous year's mark, the company only burned through $5.5 billion, less than the third quarter's $7.7 billion. Moreover, its chief financial officer, Lewis Booth said its burn rate should "substantially" improve throughout 2009.
Ford also said it does not plan on tapping federal aid, unless economic conditions worsen. The company had asked the government for a $9.0 billion line of credit but has said it has enough cash to make it through 2009. The government last month allocated $13.4 billion to General Motors, and $4.0 billion to Chrysler. Meanwhile, Ford confirmed it was cutting 1,200 jobs, or 20.0%, from its credit arm. It also reached an agreement with the United Auto Workers to end the "jobs bank" through which laid-off workers get most of their pay, though the date at which that would go into effect is still being negotiated.
The company said it also would draw $10.1 billion remaining on its credit line and defer $2.0 billion in payments pledged to a trust aligned with the United Auto Workers to add to its cash position in the first quarter.
"We took this action because of our growing concerns about the instability of the capital markets," Ford Chief Executive Alan Mulally said during a conference call, according to Reuters.
The report is far from perfect, but, considering its bleak situation, the market is willing to grade the carmaker on a curve. Shares of the Dearborn, Mich.-based company only fell 3.9%, or 8 cents, to $1.95.
Ford's cash burn rate cooled during the 2008 fourth quarter, and the automaker it expects it to ease even more in 2009.
On Thursday, the struggling automaker reported glimmers of hope. Even though it lost $5.9 billion in the last three months of 2008, and its sales were 35.8% below the previous year's mark, the company only burned through $5.5 billion, less than the third quarter's $7.7 billion. Moreover, its chief financial officer, Lewis Booth said its burn rate should "substantially" improve throughout 2009.
Ford also said it does not plan on tapping federal aid, unless economic conditions worsen. The company had asked the government for a $9.0 billion line of credit but has said it has enough cash to make it through 2009. The government last month allocated $13.4 billion to General Motors, and $4.0 billion to Chrysler. Meanwhile, Ford confirmed it was cutting 1,200 jobs, or 20.0%, from its credit arm. It also reached an agreement with the United Auto Workers to end the "jobs bank" through which laid-off workers get most of their pay, though the date at which that would go into effect is still being negotiated.
The company said it also would draw $10.1 billion remaining on its credit line and defer $2.0 billion in payments pledged to a trust aligned with the United Auto Workers to add to its cash position in the first quarter.
"We took this action because of our growing concerns about the instability of the capital markets," Ford Chief Executive Alan Mulally said during a conference call, according to Reuters.
The report is far from perfect, but, considering its bleak situation, the market is willing to grade the carmaker on a curve. Shares of the Dearborn, Mich.-based company only fell 3.9%, or 8 cents, to $1.95.
