cancel the Tristar without effectively bankrupting the Company. Moreover the Tristar offered profitable business for the future whether Lockheed was taken over or not: it was the debt from the past which was the problem and this would not be reduced by ceasing production in the future. The cost of developing further competitors for the 747, DC10 and Tristar meant that for the next 20 or 25 years, even given the present fuel situation, the prospects for sales for all of these aircraft were very good. Lockheed were really in no different a situation from Douglas or Boeing, both the latter having gone through similar difficult periods. Lockheed had the important advantage that its defence business and therefore the Company was of great importance to the US Government and formed a relatively stable platform for the future.
Mr Brown said that it was not only a question of Lockheed not being able to support the aircraft. CPA feared that development of the aircraft might cease. Once this happened or once the production line stopped it then effectively became a dead aircraft which would probably be very difficult to re-sell. He also pointed out that the engineering side of CPA were heavily in favour of the DC10 not perhaps on purely technical grounds although the RB211 was a very complicated engine and they were some way from Derby, but because of the airline's previous connections with GEC and Pratt & Whitney. They were also worried about backing-up for the Rolls Royce engine, particularly on spares. Sir Peter Thornton suggested that British airways' engineers could help prepare CPA's engineers if that would be helpful. As to back-up services this was an area where the Department would be able to offer help.
It was also something Sir Kenneth Keith was very keen to get right.
Mr Adrian Swires said that he had been grateful for the chance to talk to Sir Peter. The Company would of course have to take a commercial decision but they would bear in mind the implications of their actions and the points put forward by Sir Peter. Once they had seen what kind of guarantees Lockheed were prepared to offer, they would return to the Department with their views.
?
C Foxall
PS/Secretary A&S 27 February 1974
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