TRAVERSE CITY, Michigan (Reuters) - Ford Motor Co. (NYSE:F - News) Chief Executive Alan Mulally said on Wednesday the No. 2 U.S. automaker was on track to return to profitability in 2009 despite a forecast for weaker industrywide U.S. sales this year.

Mulally also said he was "cautiously optimistic" about reaching a deal on wages and benefits with the United Auto Workers union, and shares rose nearly 7 percent.

"The plan is that we will return to profitability in 2009. And with everything that we see today and our projections -- even with the lower overall market -- we absolutely believe we can achieve that 2009 (target)," Mulally told reporters on the sidelines of an industry conference.

Asked about the UAW talks and whether Ford would reach a deal before the current contract expires on September 14, Mulally said, "I'm cautiously optimistic that we'll reach agreement."

Ford shares gained ground after Mulally offered that positive outlook for talks, which are seen as crucial as it and the other two U.S. automakers look to cut costs after combined losses of more than $15 billion last year.

A day earlier, Ford cut its forecast for 2007 industrywide U.S. auto sales, citing weakness in the housing market. General Motors Corp. (NYSE:GM - News) and Toyota (Tokyo:7203.T - News) followed on Wednesday with their own forecasts for lower sales this year.

Mulally said he could not say if overall vehicle demand would recover in 2008, but added that Ford was watching a number of factors, including housing, economic growth and credit availability.

"If you look at the housing data, it takes a long time to get through that, sometimes two or three years, but we're going to continue to watch the data and we're going to continue to make production consistent with what that real demand is," he said.

Mulally said he was unsure if Ford's lower forecast for 2007 sales would prompt the company to reduce production over the remainder of the year. He said that decision would come in the next month.

"Around the first week in September is when we will make our decision for the fourth-quarter production," he said. "That's when we'll fine-tune the production decision."

Mulally also said Ford, which is in the middle of a restructuring that includes closing 16 plants and cutting up to 45,000 jobs, was on track to cut $5 billion in operating costs by next year under its turnaround plan, known as the "Way Forward."

Shares of Ford ended the session 6.9 percent higher, or 57 cents, to close at $8.87 on the New York Stock Exchange -- their biggest one-day percentage gain in 13 months.

Mulally told the Wall Street Journal in a separate interview on Wednesday that Ford and the UAW were discussing a deal to shift health-care liabilities to a union-run trust fund. Industry sources have previously said that Ford, GM and Chrysler are all considering such a deal.

"It's one alternative that could be beneficial to both us and the UAW," Mulally was quoted by the Wall Street Journal as saying with regard to the proposal to establish a trust fund for health care.

Earlier on Wednesday ArvinMeritor Inc.(NYSE:ARM - News) Chief Executive Chip McClure said he expected more companies would pursue similar plans in a bid to cap spiraling health-care costs.