By David Bailey and Soyoung Kim

DETROIT, US (Reuters) - Ford Motor Co posted a US$1 billion (S$1.4 billion) quarterly profit on Monday, defying Wall Street forecasts of a loss, as it cut costs and gained market share, leading it to raise its 2011 outlook to 'solidly profitable' from break-even.

Ford's shares surged 8 percent as the surprising profit and increased outlook overshadowed news that the United Auto Workers union rejected a tentative cost-cutting deal with the automaker that would have brought its labor costs in line with US rivals.

The only large US automaker not to file for bankruptcy in 2009, Ford also said later on Monday it is seeking to extend its revolving credit facility from 2011 to 2013 and raise another US$3 billion of capital through convertible debt and equity offerings.

The quarterly results provided more evidence that Ford has distanced itself from US rivals General Motors Co and Chrysler, which have struggled to complete restructurings after emerging from government-funded bankruptcies earlier in 2009.

Ford seized North American market share from GM and Chrysler when they halted most production to prepare and execute their bankruptcy cases.

"We're creating a very strong business and we are not taking taxpayer money," Mulally said on a conference call with analysts. "So the advantages clearly outweigh any potential disadvantage."

Ford reported US$1.3 billion of positive cash flow in the third quarter, its first positive quarter since the second quarter of 2007, and forecast positive cash flow in the fourth quarter. It burned through US$4.7 billion of cash in the first half of 2009.

The company also reported its first quarterly operating profit in North America since the first quarter of 2005. Ford said it was confident the global economy would be improving by 2011, but it added the near-term growth outlook 'remains rather uncertain.'

Some analysts believe Ford will be profitable in 2010.

"As the market starts to turn and sales volumes start to recover, Ford should be solidly in the black next year, certainly ahead of schedule," Autoconomy.com analyst Erich Merkle said.

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Ford reported a net profit of US$997 million, or 29 cents per share, for the third quarter, compared with a net loss of US$161 million, or a 7 cents per share, a year earlier. Revenue fell US$800 million to US$30.9 billion.

Operating profit was 26 cents per share excluding one-time items. On that basis, analysts on average expected a loss of 12 cents per share, according to Thomson Reuters I/B/E/S.

The automaker's results were boosted by Ford Motor Credit Co, which reported that profits rose to US$427 million in the third quarter from US$95 million a year earlier.

From its automotive business, Ford reported a US$446 million pretax operating profit worldwide, including positive results in all four of its regions.

Mulally said he was 'cautiously optimistic' and some financial market indicators were returning to levels seen before the Lehman Brothers collapse in September 2008, but consumer confidence and high unemployment remain a drag on the US and UK economies.

"We're just not sure about the strength of the recovery," Mulally said.

Ford posted losses totaling US$30 billion from 2006 through 2008 and remains saddled with a much heavier debt load than GM or Chrysler following their bankruptcy reorganizations.

Ford and other automakers are fighting through a plunge in auto sales in North America due to the recession. The company left its 2010 US auto industry sales forecast at 12.5 million vehicles, including medium and heavy trucks, but said it would give an updated outlook early next year.

Until a US economic recovery takes off, cash will remain king for Ford, which borrowed more than US$23 billion in late 2006 to finance its turnaround and believes it has enough money to complete its restructuring.

The automaker received US$500 million of annual labor cost savings from concessions negotiated with the UAW in February, but said it needed more cuts to align long-term costs with those of GM and Chrysler.

Analysts said the relative health of Ford compared with GM and Chrysler was a key factor in the rejection.

"The positive quarterly results released by Ford this morning are further evidence of the contributions that Ford workers have made," UAW President Ron Gettelfinger said, announcing the rejection of the proposed concessions.

Ford and UAW leaders reached the agreement in mid October, but the vote among some 41,000 Ford UAW workers met stiff opposition over a 'no-strike' clause on wages and benefits.

Ford's union workers in Canada ratified a cost-cutting deal over the weekend to preserve most of the Ford jobs in Canada.