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DRAFT TELEGRAM TO GOVERNOR HONG KONG
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BTC HONG KONG
CHOICE OF WIDE BODIED AIRCRAFT BY CATHAY PACIFIC
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John Swire, Adrian Swire and John Browne called to see Sir Pe Thornton (Secretary Aerospace and Shipping) at their own reques this morning. Warrington and Rogers were present.
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The visitors said that they had no definite proposition to put forward at this stage. Their purpose in asking for this meeting had been to let us know how they viewed the situation at present and to be sure that they understood the Government's interest. The choice between the DC10 and the Tristar was of first rate importance from Cathay's point of view, since a mistake could be
Hos Kor disastrous. They confirmed that, as reported in your telegram no 248 of 25 February, the CPA Board had agreed to defer a decision until the next Board Meeting on 18 March. They recognised that if the decision then went in favour of the DC10 and if Douglas insisted on the penalty mentioned in para 2 of your telno 242 of 22 February they would be US $250,000 worse off than at present although this would still leave them with money in their pocket as compared with the situation when we intervened at the end of
January.
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We said that there were very important British interests at stake on both sides in this decision. We recognised the implications for Cathay. On the other hand Lockheed and Rolls-Royce considered that Cathay's choice of wide bodied aircraft might well have a domino effect in the Far East. Rolls-Royce had estimated that
the as much as £150m of business/over the next 3 or 4 years might turn on Cathay's decision. The fact that, following the delay at the end of January, both Lockheed and Douglas had significantly reduced their offered price indicated that they also regarded this as a key order. We hoped the Cathay Board would therefore give full weight to other British interests in considering their decision. We could not of course forecast the attitude of the
bul incoming Government: we felt sure that in the present economic circumstances our new Ministers would be keenly interested in an issue with such important implications for both the airline and the aero-engine manufacturer.
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