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ATTACHMENT A
NOTE FOR THE RECORD
CATHAY PACIFIC
Mr Adrian Swires, Mr John Swires and Mr J Brown called on Secretary A&S today to discuss the decision the Board of Cathay Pacific are to take shortly on which wide bodied aircraft the airline should buy. Mr Rogers and Mr Warrington were also present.
Mr Adrian Swires began by explaining that they had not come with a specific proposition to put to the Department but rather for some clarification of the issues their decision would raise. It was a crucial decision for his Company which would commit them to the type of aircraft they were to operate over the next 20 years. The Company so far felt that the DC10 would be the right aircraft for them. It was not a question of range but rather that in many respects it suited them better than the Tristar. However, they recognised that this would be an important decision for Rolls Royce, so much so that the Board of CPA had decided to put off their final decision to 18 March. They were deeply con- cerned that should they choose to buy Tristars, Lockheeds and possibly Rolls Royce would not have the "muscle" to develop both aircraft and engine and convert the single aeroplane into a family including a stretched version.
Sir Peter Thornton said that he was grateful for the opportunity of talking over this vital decision which was of significance not simply for its own sake but also for the influence it would be bound to have on potential sales of Tristars to a number of other airlines in the Far East. Rolls Royce had estimated that up to £150 million worth of orders for engines would in one way or another depend on the sale to CPA.
Asked what sort of guarantees might be forthcoming in respect of Rolls Royce or Lockheed's ability to go on producing the Tristar and its engine, Sir Peter Thornton said that as far as Rolls Royce were concerned the Government had publicly stated that they would stand behind the Company and in any event the RB211 contracts as renegotiated were turning out rather better than expected. He doubted whether Rolls' ability should give rise to any worries for CPA. As for Lockheed we understand that they were prepared to give certain guarantees to CPA against various eventualities, although we did not know what these would cover. The fact that a large number of airlines including BA, TWA, Delta and ANA were now buying Tristar showed the measure of international confidence in Lockheed's ability. The way in which the banks supporting them had tied their money not just to the Tristar programme but to all Lockheed's business including their defence work meant that it would be difficult to
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