Ford Motor has moved faster than General Motors to cut costs, increase quality, and streamline global product development. But GM has one big advantage over Ford. During its quick trip through bankruptcy court, GM shed $40 billion in debt. That's roughly the amount Ford could have on its books in just two years.
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In Second quarter a net profit of $2.26 billion, with an operating loss of just $638 million, less than half what analysts expected. Ford also gained market share in the U.S., shoving aside Toyota Motor to reclaim the No. 2 spot behind GM. But the debt casts a long shadow over the automaker, which would pay an estimated $2 billion to $3 billion a year to service it. Ford is banking on a climbing share price and its brand momentum to bail it out. But if that doesn't happen, Ford could have less money than its crosstown rival to spend on new vehicles and marketing in a few years.
Mulally's first challenge is to retire $10.5 billion of revolving debt that comes due in December 2011. Himanshu Patel, who follows the auto industry for JPMorgan Chase , expects him to try to swap the debt for new shares in the next 12 months
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