First on CNBC Interview: CNBC's Auto Reporter Phil LeBeau Interviews Ford Motor Company CEO Alan Mulally on "Power Lunch" (Transcript Included)

Boeing Co. Executive Vice President Alan Mulally speaks after signing an agreement with Air India in Bombay, India, Wednesday, Jan. 11, 2006. State-run Air India on Wednesday signed an agreement with U.S.-based Boeing Co. for the purchase of 68 planes valued at more than US$ 11 billion, in what officials called the largest single deal in India's civil aviation history. (AP Photo/Rajesh Nirgude)
Rajesh Nirgude
Boeing Co. Executive Vice President Alan Mulally speaks after signing an agreement with Air India in Bombay, India, Wednesday, Jan. 11, 2006. State-run Air India on Wednesday signed an agreement with U.S.-based Boeing Co. for the purchase of 68 planes valued at more than US$ 11 billion, in what officials called the largest single deal in India's civil aviation history. (AP Photo/Rajesh Nirgude)

When: April 24 at 12:15PM ET
WHere: "Power Lunch"

Following is the unofficial transcript of a FIRST ON CNBC interview with Ford Motor Company CEO Alan Mulally. During the interview Mulally discusses Ford Motor Company's better than expected earnings, when investors will start to buy into the turnaround and 2008 guidance, among other topics.

WAPNER: WE ALSO HAD PRETTY GOOD EARNINGS OUT WHICH BRINGS US TO OUR NEXT STORY. FORD OF COURSE OUT WITH ITS EARNINGS.AND THE AUTOMAKER SURPRISED INVESTORS BY POSTING A PROFIT.CNBC'S PHIL LeBEAU JOINS US FROM DEARBORN, MICHIGAN, WIITH FORD CEO ALAN MULALLY WITH A FIRST ON CNBC INTERVIEW.

LEBEAU: THANK YOU, SCOTT .I HAVE A DATE HERE THEY WILL LIKE TO GIVE AD MULLALLY, APRIL 21st, 2004, DO YOU KNOW WHAT THAT HAS IN COMMON TODAY.

MULALLY: NO.

LEBEAU: THE LAST TIME FORD SHARES WERE UP MORE THAN 10% IN ONE DAY WHICH THEY WERE COMING IN NOW. ON THE STRENGTH OF A SURPRISED PROFIT IF THE FIRST QUARTER. HOW MUCH OF THIS DO YOU ATTRIBUTE TO COST-CUTTING AND HOW MUCH DO YOU ATTRIBUTE TO THE SUCCESS THAT YOU'RE HAVING OVERSEAS?

MULLALLY: WELL I THINK IT'S A COMBINATION OF THOSE TWO, PHIL, AND A COUPLE OTHERS. CLEARLY WE'VE RESTRUCTURED OURSELVES AGGRESSIVELY TO GET OURSELVES BACK TO PROFITABILITY. CLEARLY A PIECE AND THE OTHER IS ALL OF THE NEW PRODUCTS THAT WE HAVE AROUND THE WORLD, ARE STABILIZEDIN OUR MARKET SHARE AND OF COURSE AS YOU POINTED OUT WE'RE GROWING PROFITABLY EVERYWHERE AROUND THE WOURD WORLD OUTSIDE OF THE UNITED STATES.

LEBEAU: BUT YOU'RE NOT CHANGE, GUIDANCE FOR '08-'09. IN THE SENSE THAT YOU'RE NOT SAYING JUST BECAUSE WE HAVE A SURPRISE PROFITABLE QUARTER WE'RE STILL PLANNING TO HAVE SOME ROUGH QUARTERS OVER THE NEXT THREE QUARTERS THIS YEAR AND SOME COST-CUTTING GOING INTO 2009, RIGHT?

MULALLY: EXACTLY.AND CLEARLY THE BUSINESS ENVIRONMENT HAS DETERIORATED SINCE WE PUT TOGETHER OUR ORIGINAL PLAN BUT HAVING SAID THAT THE MOST IMPORTANT THING THAT WE'RE GOING TO DO IS IMPROVE OUR PERFORMANCE YEAR OVER YEAR AS WE GET BACK TO PROFITABILITY AND START TO GROW AGAIN.

LEBEAU: HOW MUCH PRESSURE ARE YOU SEEING ON THE MARGINS FOR NEW VEHICLE SALES BECAUSE OF CONSUMER PULLING BACK AND JUST HOLDING BACK A BIT IN TERMS OF BUYING NEW CARS AND TRUCKS?

MULALLY: WE'VE REALLY REDUCED OUR EXPECTATIONS IN THE UNITED STATES TO AROUND 15.3 TO 15.6 MILLION VEHICLES.BUT THE BEST THING THAT WE DID WAS TO REDUCE OUR PRODUCTION CAPACITY TO THE REAL DEMAND SO IT HONORS THE CUSTOMER, KEEPS RESIDUAL VALUE UP AND IN THE NUMBERS THAT THEY MAKE.

LEBEAU: AS YOU ARE PULLING BACK THE CAPACITY -- ANOTHER ROUND OF BUYOUTOFFERS OUT THERE AND ANOTHER 4,000 WHO HAVE TAKEN THIS, YOU WOULD LIKE TO GET ANOTHER 4,000. IF YOU CAN'T CONVINCE THE RANK AND FILE TO TAKE THESE BUYOUT OFFERS WILL YOU HAVE TO RESORT TO THE LAYOFFS?

MULALLY: WELL, WE WILL HONOR OUR CONTRACT AND THE BUYOUTS ARE CLEARLY THE MOST PREFERRED WAY OF DOING IT. AND NOW WE WON'T HAVE ANOTHER COMPANY-WIDE BUYOUT BUT WE'LL GO PLANT BY PLANT AND VEHICLE BY VEHICLE, MATCH THAT CAPACITY TO THE DEMAND OF THAT VEHICLE, AND THEN TAKE THE ACTION ON OUR ASSETS.

LEBEAU: WHAT ABOUTVOLVO AND MERCURY, SPECIFICALLY WOULD YOU ENTERTAIN SELLING VOLVO NOW.

MULALLY: THE MOST THING WE CAN DO FOR VOLVO THAT WE SHARED THIS MORNING IS WE IMPROVE THEIR OPERATIONS DRAMATICALLY. THAT MEANS RESTRUCTURE ESPECIALLY IN NORTH AMERICA HAD THIS WHICH IS THE BIGGEST ISSUE AND THE COMMODITY PRICING AND THEIR BASIC PRODUCTIVEITY AND THAT'S OUR FOCUS NOW.

LEBEAU: NO PLANS TO SELL IT?

MULALLY: NO.

LEBEAU: AND MERCURY?

MULALLY: MERCURY'S A VERY IMPORTANT PART OF OUR PORTFOLIO WE'VE GOT A GREAT LINEUP.A GREAT PRODUCT LINE FOR IT AND IT'S DOING VERY WELL.

LEBEAU: BUT YOU KNOW A LOT OF PEOPLE THINK THAT HEY, LISTEN YOU ARE BETTER SERVED STREAMLINING AND GETTING RID OF A BRAND THAT FRANKLY HAS BEEN DRIFT FOR YEARS.

MULALLY: AND WE HAVE SAID TOO ANY GOODBUSINESS, THIS GOING THROUGH A TRANSFORMATION LIKE THIS ALSO, WILL CONTINUE TO REVIEW THEIR PORTFOLIO AND WE'RE CONTINUING TO DO THAT BUT RIGHT NOW WE BELIEVE IN MERCURY.

LEBEAU: LAST QUESTION, ABOUT 11% SHORT INTEREST IN SHARES OF FORD, EVEN WITH THE STOCK JUMPING TODAY, WHEN WILL PEOPLE BUY INTO THE FORD TURNAROUND PLAN, THE INVESTOR OUT THERE.

MULALLY: WELL I THINK IT'S VERY INTERESTING, BECAUSE THE FEEDBACK THAT WE'RE GETTING IS THAT EVERYBODY IS VERY PLEASED WITH OUR PLAN TO ONE, RESTRUCTURING THE PROFITABILITY,THE FACT THAT WE'RE CONTINUING TO INVEST IN NEW PRODUCTS THAT ARE GETTING TERRIFICLY REVIEWED BY EVERYBODY AROUND THE WORLD.WE HAVE THE LIQUIDITY IN PLATES AND LEVERAGING THESE GLOBAL ASSETS. SO I THINK THAT IF WE KEEP IMPROVING QUARTER AFTER QUARTER, YEAR AFTER YEAR THE INTEREST WILL FOLLOW.



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