Ford CEO Mulally says No Bailout Needed -- Unless It Is

Ford President and CEO Alan Mulally wants to have his cake and eat it, too.

Mulally keeps insisting Ford doesn't need a U.S. government bailout like Chrysler and GM. He did so again today, even as Ford reported a stiff net loss of $5.9 billion for the fourth quarter of 2008, and a net loss of $14.6 billion for the full year.

"Customers are starting to see Ford really is different," Mulally said in a conference call for auto industry analysts and reporters.

But Mulally always leaves himself an out. In effect, Mulally says Ford doesn't need a bailout -- unless business conditions get a lot worse. How much worse, he's not saying.

Meanwhile, business conditions have gotten a lot worse. For instance, Ford said today it now expects U.S. auto sales in 2009 of only about 11.7 million, down from about 13.2 million in 2008. So, does that mean Ford needs a bailout, after all?

No, Mullaly said. In answer to a question, he acknowledged that the business environment has gotten worse since Ford submitted a business plan to Congress on Dec. 2, 2008.

At that time, Ford proposed three scenarios, ranging from most to least optimistic. "We are clearly ranging out at the bottom side of that (group of forecasts) in the first half (of 2009)," Mulally said. However, he said he expects business to pick up in the second half.

Ford also disclosed today that it has "drawn down," that is, borrowed, the last remaining $10.1 billion it had available from a huge refinancing the company did in 2006. That credit facility was a big reason why Ford didn't suffer the same cash crunch Chrysler and GM suffered, at the end of 2008. However, Ford has not changed its mind about needing a bailout, Mulally said. He said it would take an "event," such as "the bankruptcy of a major competitor," which would also drag down some of Ford's suppliers, to force Ford to ask for government loans.

That's specific enough, but Mulally went on to say a number of other "events" could also change the company's mind. "It could be the economy, it could be the industry, it could be (market) share, it could be credit," he said.

Rebecca Lindland, a director for research and consulting firm IHS Global Insight, said separately her firm expects U.S. sales of only around 10.5 million units, close to 1 million fewer than Ford's forecast, and that in her opinion, Ford eventually will need government loans.

"We've been concerned about Ford ever since they said that, about not needing the money," Lindland said in a Jan. 28 conference call. "Our forecast shows that they will need the money."