UPDATE 2-Ford seeks $9 bln line, aims to break even in 2011

(Recasts, adds details from submission, vehicle plans, background and bylines)

By David Bailey and Poornima Gupta

DETROIT, Dec 2 (Reuters) - Ford Motor Co (F.N) on Tuesday asked Congress for up to $9 billion in a government credit line to support its restructuring, saying it expects to break even or be profitable in 2011.

The news sent shares in Ford, considered to be the strongest of the three Detroit automakers, soaring as much as 13 percent in morning trading. The shares have more than doubled since late November.

Ford, which burned through $7.7 billion of cash in the third quarter, said it does not anticipate a liquidity crisis in 2009, barring a bankruptcy filing by one of its U.S.-based rivals, General Motors Corp GM.N or Chrysler LLC [CBS.UL].

Ford said in the plan submitted to the U.S. Congress that GM and Chrysler were "at risk of running out of cash in a matter of weeks or months" and warned that the collapse of one of its two domestic rivals could threaten Ford because of the overlapping supplier and dealer networks.

Ford, GM and Chrysler have a Tuesday deadline for submitting detailed plans to congressional leaders outlining restructuring efforts and their prospects for survival in order to secure $25 billion in emergency funding.

Ford Chief Executive Alan Mulally, who along with other automaker executives drew criticism from U.S. lawmakers over their compensation and luxury travel arrangements, called the bridge loan "a critical backstop" for Ford that it may not have to access.

Ford said its CEO would take a $1 annual salary if Ford does access government funds. The automaker also said it would sell its five corporate aircraft.

"We want to continue this transformation, but if the economy gets worse, and the industry gets worse, we want to be able to access the bridge loans also to keep our transformation going and be part of the economic recovery," Mulally told Reuters.

Ford expects both its overall and North American automotive business pretax results to be break-even or profitable in 2011.

Ford said in the plan that it understood that taxpayers' funds needed to be protected from default but objected to proposals to make the $9 billion government credit line senior to other claims.

The company has $17.5 billion of senior secured debt, including $10.2 billion of credit facilities secured by all of Ford's U.S. assets, including its Blue Oval logo.

A condition of senior status for any government loan could cause lenders or holders of Ford's debt to allege a debt default that could lead to a cash squeeze, the automaker said.

By making that claim Ford is insisting on more liberal terms for government funding that either GM or Chrysler were likely to see.

In the plan submitted to Congress, Ford said it had entered into discussions with the United Auto Workers to further reduce its cost structure and expects to continue to reduce its dealer and parts supplier base. Ford expects to have 3,790 dealers at the end of 2008.

"The Ford news has given the market a lift as it indicates that the automaker within two years will be back to profitability," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

All three Detroit automakers have been hit by the severe downturn in the U.S. auto demand following the turmoil in the financial markets that sent U.S. economy into a recession.

Ford, which has already sold three of its luxury brands, on Monday announced it could sell the luxury Swedish car brand Volvo as it scrambles to shore up cash.

Ford expects U.S. industrywide auto sales of 12.5 million vehicles next year with the annual demand increasing to 14.5 million units in 2010 and 15.5 million units in 2011.

Ford's latest restructuring plan also includes a $14 billion investment in technology in United States over seven years, electrification of some of its vehicles and cuts in compensation for its management worldwide.

Ford shares were up 25 cents, or 9.8 percent, at $2.80 on the New York Stock Exchange. (Additional reporting by Doris Frankel in Chicago; Editing by Maureen Bavdek and Brian Moss)