CONFIDENTIAL
RECEIVED 144
REGISTRY No.52
GRPS 452
PRIORITY
CYPHER/CAT A
1 MAR1974
FM HONG KONG 010855Z
CONFIDENTIAL
HKK2/12
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TO PRIORITY FCO TELNO 273 OF 1ST MARCH, 1974. INFO ROUTINE BTC
HONG KONG AND BCARFE.
LAST
REF.
T
YOUR TELNO 227.
NEXT
REF
22) (25′
PA
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CHOICE OF WIDE BODIED AIRCRAFT BY CATHAY PACIFIC.
WE HAVE BEEN KEEPING IN CLOSE TOUCH WITH BLUCK OVER THIS
ISSUE. FOLLOWING FURTHER DISCUSSIONS ON PRICE WITH BOTH LOCKHEED
AND DOUGLAS, CPA'S LATEST CALCULATIONS OF THE NETTED DOWN COST, INCLUDING SPARES, ARE
TRISTAR
DC 10
2 AIRCRAFT US DOLLARS 47.62 MILLION US DOOOLLARS 53,68 MILLION
PURCHASE
4 AIRCRAFT US DOLLARS 96.67 MILLION US DOLLARS 103.33 MILLION
PURCHASE
THE DIFFERENCE IN COST PER AIRCRAFT IS
US DOLLARS 3,030,000 FOR A TWO AIRCRAFT PURCHASE AND
US DOLLARS 1,664,000 FOR A FOUR AIRCRAFT PURCHASE,
2, ON THIS BASIS CPA'S CALCULATIONS, ON THE BASIS OF THE INCREASED
OPERATING COSTS AND LOWER EARNINGS POTENTIAL OF THE TRISTAR,
ARE THAT IT WOULD TAKE 15 YEARS TO RECOUP THE INCREASED CAPITAL
COST OF THE DC 10 ON THE BASIS OF A TWO AIRCRAFT PURCHASE AND
EIGHT YEARS ON THE BASIS OF A FOUR AIRCRAFT PURCHASE, PURELY ON PRICE ALONE, THEREFORE, BLUCK CONSIDERS THAT THE DEAL NOW FAVOURS
LOCKHEED.
3. BLUCK CONFIRMED, HOWEVER, WHAT THE SWIRES AND JOHN BROWNE INDICATED TO THORNTON, NAMELY THAT CPA'S MAJOR WORRY CONCERNS LOCKHEED 'S FINANCIAL MUSCLE AND, INDEED, THE WHOLE FUTURE OF THE COMPANY, INCLUDING THE TRISTAR PROGRAMME. IN PARTICULAR, CPA
ARE AFRAID THAT LOCKHEED WILL BE EITHER UNABLE OR UNWILLING TO
CONFIDENTIAL.
/ DEVELOP