Ney York, July 27, 2007 - Ford surprised Wall Street with its first quarterly profit in two years, but chief executive Alan Mulally warned that the car maker would revert to type in the second half and report "substantial" losses for the rest of 2007.

The company also said it was pursuing detailed talks with potential buyers of its Jaguar and Land Rover divisions and that the chances of a sale were "greater than 50pc".

Ford had initially refused to confirm that the two UK marques were for sale and has given little away since, a vow of near-silence that sparked a heated exchange when union leaders met Ford's European chief.

Yesterday Ford unveiled a profit of $750m (£364m) - an impressive turnaround from the $1bn loss reported this time last year.

However, Ford still posted a loss in its home market of North America as revenues declined. High petrol prices continue to eat into sales of Ford's more profitable trucks and sports utility vehicles.

"We recognise the challenges that lie ahead," said Mr Mulally, adding: "We remain fully committed to delivering our plan. Our team is very encouraged by the significant progress we are making."

He dismissed suggestions that Ford may still be forced to consider filing for Chapter 11 bankruptcy protection. "We aren't talking about that, and I can understand from the history why some people would," he acknowledged.

Jaguar and Land Rover are understood to have attracted interest from private equity groups TPG, Ripplewood and Cerberus, as well as a number of Indian companies.

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