Ford to sell jets, cut executive pay in return for $9bn lifeline

[SpoolMan]

Troubled car giant Ford is to sell its five corporate jets, pay chief executive Alan Mulally a $1-a-year salary and scrap management bonuses in return for up to $9bn (£6bn) of lifeline funding from the US government.

Ford, which today submitted a detailed business plan to the US Congress in the hope of being granted its share of $25bn alongside General Motors and Chrysler, is planning to undertake drastic changes to its business model.

In a detailed 33-page plan, the 105-year-old car giant revealed that it has asked American politicians for up to $9bn in bridge financing, but stressed that it hopes to be able to make the necessary changes to its business “without accessing the loan.” The plan is predicated on Ford becoming break-even or profitable in its North American division and across the company as a whole in 2011.

If the US Congress agrees to grant Ford a loan, however, and Ford does use it, Mr Mulally has agreed to work for a salary of just $1, in what the plan called “a sign of his confidence in the company’s transformation plan and future.”

The gesture comes just weeks after Mr Mulally, when asked if he would be willing to accept a $1 salary, said: “I think I’m ok where I am.”

The Ford chief has received almost $50m in pay and benefits over the last two years, in addition to $752,000 spent on personal and family use of the corporate jets. In contrast, the company’s chairman, Bill Ford, has not taken a salary for four years.

As a sign that he has listened to lawmakers, Mr Mulally will also drive to Capitol Hill for hearings to be held in both the House and Senate this week, following criticism that the Big Three used private jets to travel to Washington during the last set of hearings in early November.

To emphasise Ford’s green credentials, Mr Mulally will travel to Washington in a Ford Escape Hybrid and a Mercury Mariner.

The business plan is heavily focused on re-engineering Ford to become an environmentally-efficient car manufacturer, spending $14bn in the US on “advanced technologies and products to improve fuel efficiency” over the next seven years.

Ford also said it would next month detail plans to boost the company’s family of hybrid vehicles, including work on a full battery-powered electric vehicle to be on sale by 2010.

The company also plans to cut its dealer base, and has already announced the possible sale of Volvo, the remaining of its European marques following the sale of Jaguar and Land Rover to Tata.

By James Quinn, Wall Street Correspondent