Ford Motor posted a $8.7 billion quarterly loss Thursday as it wrote down the value of truck and SUV operations and cautioned that it did not expect to see a U.S. economic turnaround until 2010.
The loss was deeper than analysts had forecast and sent Ford shares down by 7 percent in premarket trading.
Ford also announced a sweeping realignment of its North American operations intended to reduce its reliance on trucks and SUVs by rolling out a range of smaller, more fuel-efficient vehicles and converting three truck plants to make cars.
Chief Financial Officer Don Leclair said he was confident Ford had the cash needed to ride out the U.S. downturn.
"We're confident that we have enough liquidity to get through," Leclair told reporters.
Ford said it had assumed the U.S. economy would begin to recover by early 2010 despite oil prices that will remain "volatile and high." Ford's net loss amounted to $3.88 per share, in the second quarter, compared with net income of $750 million, or 31 cents per share, a year earlier.
Excluding $8 billion of one-time charges, Ford reported a loss of 62 cents per share from continuing operations.
Analysts on average expected Ford to report a loss of 25 cents per share excluding one-time items, according to Reuters Estimates. (See the accompanying video for CNBC's Thursday interview with Ford CEO Alan Mulally.)
The items included pre-tax impairment charges of $5.3 billion for Ford North America and $2.1 billion for Ford Motor Credit due to deteriorating economic conditions, primarily due to the shift from large trucks and SUVs.
Ford, the No. 2 U.S. based automaker, reported a surprise profit in the first quarter, but later warned that a sharp shift in demand toward cars and away from large vehicles due to high gas prices would pressure its results.
The automaker said it was on track to cut salaried expenses by 15 percent by August 1.
It cut 200 white-collar jobs in the second quarter and said most cuts under its cost-cutting plan would take place in July, with charges accruing to third quarter results.
Ford also has continued widespread buyouts for hourly workers.
It cut about 1,800 North American hourly jobs in the second quarter, and recently said it would extend buyouts to union-represented workers at a range of plants as it cuts production capacity.
The company plans to convert three large truck and SUV plants to small cars beginning in December and double its production of four-cylinder engines by 2011.
Ford has abandoned a long-standing goal of returning to profitability in 2009 and delayed the launch of a redesigned top-selling F-150 pickup truck by two months to sell down inventory.
Ford also said it would keep its Mercury brand in addition to Ford and Lincoln.
The No. 2 U.S. automaker said its latest turnaround plan assumed that the three brands would maintain about a 14-percent market share in North America.
The company said it would produce a new small car for Mercury in 2010 and the next generation of its signature Explorer SUV would be built on a car platform in 2010.
Ford posted a $1.3 billion pre-tax loss in North America in the quarter, sharply wider than the $270 million loss a year earlier, reflecting the sharp deterioration in the auto market, particularly for large trucks and SUVs.
The company reported increased pretax profits in Europe, South America and its Asia Pacific Africa region.
Ford ended the quarter with a cash position of $26.6 billion, including marketable securities, down $2.1 billion from the first quarter.
Ford Motor Credit posted a net loss of $1.43 billion in the quarter, compared with net income of $62 million a year earlier.
Shares fell 42 cents to $5.50 in premarket trading.