CONFIDENTIAL
!
Current position
6 Lockheed have reduced their price significantly (so that despite cuts also by Douglas the L1011's overall cost would be less over 15 years) and Lockheed and Rolls Royce have dealt satisfactorily with virtually all CPA's technical doubts, including questions on the longer range version with the higher thrust -524 engine which CPA might need sometime. Although some of CPA's operating staff still favour the DC10 it now seems that only one factor is likely to stop the order going to Lockheed. This, however, is a major issue. CPA want to be confident that Lockheed will get through their present financial difficulties so as to be able to support the existing Tristar and develop new versions. (CPA in the past bought Convairs, an aircraft which did not develop, and Electras, which Lockheed had to recall for repairs which Lockheed met although this was after warranty.)
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know).
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Lockheed cannot give absolute assurances on their future (as we
Instead they have:-
i provided, in advance of publication, their 1973 accounts (which show a reasonable picture) and details of the steps taken to secure short-term finance, including the confidence shown by other airlines in bringing forward orders;
ii
offered guarantees on refund of half CPA's advance payments, on cost of spares and training, and on buy-back of aircraft if Lockheed fail.
The CPA Board is due to decide in Hong Kong on 18 March. But the way their decision is expected to go will be made known to us on
15 March when a Swire's representative has arranged to meet officials again in London. The Swires are undoubtedly receptive to the "British" arguments put to them (eg they want to order a Redifon simulator) but are unlikely to oppose Bluck, whose latest views cannot be discovered.
Further Action
9 Lockheed and Rolls, after highest level representations in Hong Kong and to the parent group in London, consider they have now done all they can to sell the Tristar. Our influence, which is based really only on the matter of traffic routes, has been pushed close to its limit. These routes have never been used to secure aircraft sales, and there are strong possibilities of a quarrel with the Hong Kong Government if too much pressure is put on CPA.
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My advice therefore (agreed with Civil Aviation 2 of Department of Trade) is that we do no more before the 15 March beyond a final reminder to all in CPA of the arguments already put to them. The Swires have
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