Has Ford Found a Solution to Its Debt Woes?

Ford Motor Co. (NYSE:F) is offering to buy out the pensions of white-collar retirees to reduce its debt burden in a move that could help the automaker regain its investment grade rating and reclaim the assets it mortgage five years ago when the U.S. auto industry nearly collapsed.

The automaker said it will give 90,000 U.S. salaried retirees and salaried former employees the option to continue receiving their monthly pension payments, or to take them in a lump sum. General Motors (NYSE:GM), which required a government bailout to survive the crisis, is considering a similar plan.

Ford’s pension liability of $74 billion at the end of last year was underfunded by $15.4 billion, dragging on its bottom line and preventing Standard & Poor’s and Moody’s from rating its debt as investment grade. Fitch Ratings upgraded Ford’s debt to the lowest investment grade last Tuesday. If Ford receives a second upgrade, it will reclaim the assets it pledged in 2006 for a $23 billion lifeline, including its iconic blue oval logo.

Ford has not said when the pension buyouts will be offered or how they will be structured, and how much the company saves will depend on how many pensioners opt in to the plan.

On Friday, Ford announced its 11th consecutive profitable quarter with $1.4 billion, though profits fell 45 percent from the first quarter of 2011.

On Friday, Ford announced its 11th consecutive profitable quarter, even as profits fell 45 percent from the first quarter of 2011. Ford shares are trading down today nearly 3 percent in afternoon trading.