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FM D T 3118552
CONFIDENTIAL.
RECEIVED IN REGISTRY No. 51
- 6 FEB 1974
NKK 2112
Mr You
17. Goodfellow
MTD
Гакед
не Taylor
Another mass turit portem (albeit
or a smaller scale and without the toy Kay Gout being directly and in wowed) about
TO IMMEDIATE GOVERNOR HONG KONG TELEGRAM NUMBER JANUARY 1974 AND TO BCARFE HONG KONG.
PURCHASE OF WIDE-BODIED AIRCRAFT.
31
which we have only just hean in formed
A0Q1/2
DTI HAVE BEEN KEEPING IN CLOSE TOUCH WITH CATHAY PACIFIC AND SWIRES, FOR SOME MONTHS, REGARDING CPA'S EVALUATION OF ALTERNATIVE WIDE-BODIED AIRCRAFT. THE UNDERSTANDING WAS THAT, IN VIEW OF BRITISH
INVOLVEMENT IN TRISTAR, DTI WOULD BE KEPT IN THE PICTURE AS THE EVALUATION PROCEEDED, AND THAT NO FINAL DECISION WOULD BE TAKEN UNTIL THEY HAD BEEN INFORMED OF CATHAY'S CONCLUSIONS.
2. THE ORIGINAL CONTENDERS WERE BOEING 747, DC 10 AND TRISTAR. AT
A FAIRLY EARLY STAGE, THE 747 WAS ELIMINATED, LEAVING THE CHOICE TO BE MADE BETWEEN THE DC 10 AND TRISTAR. OUR UNDERSTANDING WAS THAT THESE TWO WERE STILL RUNNING NECK AND NECK.
3. WHEN BLUCK WAS HERE EARLIER THIS MONTH, DTI UNDERSTOOD THAT CATHAY HAD NOT YET COMPLETED THEIR EVALUATION BUT THAT IN ANY CASE
THE BOARD WAS EXPECTED TO DECIDE (AT ITS MEETING IN HONG KONG LATER THIS MONTH) TO DEFER A DECISION ON ANY PURCHASE OF NEW AIRCRAFT FOR SIX MONTHS WHILE THEY WAITED TO SEE HOW THE ECONOMIC SITUATION
DEVELOPED IN THE FAR EAST.
4.
HOWEVER ON 29 JANUARY SWIRES INFORMED ROGERS DTI THAT AT A CPA BOARD MEETING THE PREVIOUS DAY, A DECISION HAD BEEN TAKEN TO SIGN A LETTER OF INTENT TO PURCHASE TWO DC 10S AND THAT A PRESS ANNOUNCEMENT WOULD BE MADE ON 31 JANUARY. FOLLOWING CONTACTS BETWEEN
ROGERS AND JOHN SWIRE (AND BETWEEN THE LATTER AND BREMRIDGE IN HONG KONG) CATHAY HAVE NOW AGREED TO DEFER MATTERS FOR ONE MONTH IN ORDER TO ALLOW TIME FOR FURTHER CONSIDERATION. MCDONNELL DOUGLAS HAD STIPULATED THAT IF THE LETTER OF INTENT WAS NOT SIGNED BY 31 JANUARY, A PENALTY OF US 200,000 DOLLARS WOULD HAVE TO BE PAID: BUT
THEY HAVE NOW AGREED TO WAIVE THIS.
5. JOHN SWIRE SAW MR HESELTINE (MINISTER FOR AVIATION AND SHIPPING)
THIS MORNING AND THE MINISTER MADE PLAIN TO HIM THE INFERENCE THAT
WOULD BE DRAWN IF A BRITISH AIRLINE WERE TO DECIDE AGAINST TRISTAR
IN A CLOSE RUN COMPETITION OF THIS KIND. CATHAY'S DECISION COULD
NOT THEREFORE BE TAKEN IN ISOLATION.
6. WE ARE NOW CONSIDERING HOW BEST TO FOLLOW THIS UP. GRATEFUL FOR
YOUR URGENT ADVICE.
DOUGLAS-HOME
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