Ford Motor Co. posted a surprise net profit of $997 million in the third quarter and its cash position turned positive, reversing a long stretch of cash burn.

Ford’s pre-tax operating profit of $1.1 billion for the quarter marked its first quarter in the black on that basis since early 2008. The automaker ended the quarter with $23.8 billion in cash, up $2.8 billion from the end of the second quarter.

Its North American unit posted a pre-tax operating profit of $357 million, for its first positive quarter since the first three months of 2005.

Ford attributed the improved performance to new products, reduced structural costs and improved results at Ford Credit. The automaker recorded U.S. sales increases in July and August, aided by the cash-for-clunkers program, and lifted its market share for the quarter.

“Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,” said Ford CEO Alan Mulally.

Revenue in the third quarter fell to $30.9 billion from $31.7 billion a year earlier.

In the second quarter, Ford narrowed its pretax operating loss to $424 million. Its net profit of $2.3 billion for that quarter stemmed from gains related to debt-reduction actions.

Ford, which had said it would hit “break-even or better” in 2011, said it now predicts the company will be “solidly profitable” that year on a pre-tax basis, not including special items. Ford will have positive automotive operating-related cash flow that year, the automaker said.

More uncertain about 2010

Ford said it was more uncertain about the 2010 economic outlook and plans to give more guidance about its 2010 assumptions when it releases its full-year 2009 results.

The company said it predicted European auto sales will decline substantially as scrappage incentive programs end, while U.S. sales volumes may improve somewhat from this year’s levels.

Ford is predicting U.S. total sales of 10.6 million vehicles this year, including a couple hundred thousand medium- and heavy-duty trucks. Ford has forecast 2010 total U.S. sales of 12.5 million units.

That 2010 figure is more optimistic than the forecasts delivered by U.S. dealer groups last week.

The ability to avoid the bankruptcies that engulfed General Motors Co. and Chrysler has given Ford a leg up, but now may be working against it. The UAW is expected to announce later today that workers have rejected proposed changes to their contract.

Votes tallied at union locals over the weekend made left no doubt that the concessions would be turned down. If the vote fails, Ford’s long-term labor costs would not be in line with rivals.

Case for concessions

In February, Ford completed a revised labor agreement with the UAW that cut costs by about $500 million per year. The automaker has said it needs additional concessions to keep it cost competitive with GM and Chrysler over the long term.

The proposed agreement workers are chafing at includes a “no-strike” clause on wages and benefits and a reduction in job classifications for skilled trades workers, as well as some production commitments and a $1,000 one-time bonus.

The Canadian Auto Workers union, meanwhile, over the weekend voted 83 percent in favor of an agreement that freezes wages for some 7,000 workers into September 2012 in exchange for protecting most factory jobs in Canada.

Morningstar analyst David Whiston said the automaker’s touting of increased U.S. market share and improved quality may be working against it in the UAW vote.

“Ford has a lot of good things going,” Whiston said before today’s results were released.

Ford posted net losses totaling $30 billion from 2006 through 2008.

Ford borrowed more than $23 billion in late 2006 to finance its turnaround and has said it believes it has enough money to complete its restructuring.

Ford burned through $4.7 billion of automotive operating cash in the first half of the year, including $1 billion in the second quarter. Ford had said it expected the second-half outflow to be substantially slower than it was in the first half.