Ford to reduce debt, boost cash-flow in '10

Ford Motor Co will focus strongly in 2010 on reducing heavy long-term debt and narrowing a cash-flow edge held by its bailed-out U.S. rivals, Ford's chief executive said on Tuesday.

Alan Mulally said at the Washington Auto Show that Ford is planning balance sheet improvements that will accelerate as the bottom line becomes healthier. For the moment, he said Ford can live with a "little bit of a disadvantage" on the "cash side" compared with General Motors Co GM.UL and Fiat-led Chrysler.

"The advantage we have by running a healthy business far outweighs a couple of disadvantages right now. We honored our bondholders, our stockholders, and our banks that supported us. We honored our dealers," Mulally said of the company's decision to shun a government-backed restructuring.

"We are paying back our loans. We are paying back our loans," he repeated for emphasis to an audience gathered at the Ford display that included senior U.S. lawmakers and other government officials.

Ford boosted its credibility with Congress and the Obama administration by opting against taking government money to overhaul its operations in 2008 and 2009. It borrowed more than $23 billion in 2006 from traditional sources to finance its turnaround and won steep givebacks from the United Auto Workers.

Mulally's remarks echoed through the hall where GM executives a moment before had fielded questions from reporters about plans to repay $5.7 billion in remaining government debt by June. That money was part of $50 billion in public bailout and bankruptcy aid extended to GM over the past year.

GM is now government controlled while taxpayers hold a 10 percent stake in Chrysler after pouring nearly $15 billion into that company.