TAL
DECISION BEING UPHELD.
CATHAY'S PURCHASE OF AIRCRAFT AT DO T'S REQUEST.
IT IS IRONIC THAT WHILST THE DECISION OF THE CAA IS FOUNDED ON AN EXPRESSED PREFERENCE FOR 240 SEAT DC10 AIRCRAFT RATHER THAN THE 415 SEAT BOEING 747, IT WAS AS A DIRECT RESULT OF THE INTERVENTION OF MR HESELTINE WHEN A MINISTER IN FEBRUARY 1974 THAT CATHAY CHANGED THE DECISION OF THEIR BOARD SO AS TO BUY ROLLS
ROYCE ENGINED PLANES RATHER THAN THE AMERICAN ENGINED AIRCRAFT MANUFACTURED BY DOUGLAS.
THE HISTORY IS AS FOLLOWS (THE DETAILED SUPPORTING DOCUMENTS ARE
IN ANNEXURE 'E').
(A) AT MR HESELTINE'S REQUEST, A MEETING WITH THE CHAIRMAN OF THE SWIRE GROUP TOOK PLACE ON 31.1.74. MR HESELTINE INDICATED ''HE WAS FLABBERGASTED TO BE PRESENTED YESTERDAY WITH THE NEWS THAT IT
(THE DECISION TO BUY DOUGLAS) WAS A FAIT ACCOMPLI''. MR SWIRE SAID ''ALL THINGS BEING EQUAL CPA BOARD -INDEED ALL OF US- WOULD HAVE PREFERRED AN AIRCRAFT WITH A BRITISH COMPONENT BUT THAT THE BALANCE OF JUDGEMENTS WAS THAT ALL THINGS WERE NOT EQUAL.......... AND THE BOARD HAD TO TAKE WHAT THEY THOUGHT WAS THE RIGHT COMMERCIAL DECISION''. ON THE WAY TO THE LIFT, MR HESELTINE SAID
....ONE OF MY EMBARRASSMENTS IS PERSUADING THE CHINESE ET AL TO BUY BRITISH EQUIPMENT IN THE FACE OF THE EVIDENCE THAT ONE OF THE MOST SUCCESSFUL OPERATORS -BRITISH AT THAT-IN THE AREA HAS BOUGHT ELSEWHERE**.
(B) ON 21 FEBRUARY, CATHAY'S CHAIRMAN MINUTED ALL THE DIRECTORS SAYING ''AT THE BOARD MEETING ON 1.2.74 MANAGEMENT WERE AUTHORISED .....TO SIGN..... A LETTER OF INTENT WITH DOUGLAS....
FOR THE PURCHASE OF DC10 AIRCRAFT BY END FEBRUARY 1974, SINCE THAT DATE WE HAVE BEEN SPECIFICALLY REQUESTED BY THE UK GOVERNMENT TO DEFER THE SIGNING OF A LETTER OF INTENT TO AT LEAST 8 MARCH AS A RESULT OF THE UK ELECTION DATE. HE THEN SOUGHT (AND OBTAINED) THE PERMISSION OF EACH DIRECTOR TO DEFER ANY SIGNING TILL 18 MARCH.
(C) THE D T I MINUTES OF A MEETING WITH CATHAY ON 11 FEBRUARY SPECIFICALLY REFER TO THE POLITICAL CONSEQUENCES TO THE MINISTER IF THE DECISION WERE TO BE ANNOUNCED BEFORE THE GENERAL ELECTION, AND THE DESIRE TO PROTECT HIM FROM THIS BY ASKING CATHAY TO DELAY THE ANNOUNCEMENT.
(D) ON 27 FEBRUARY 1974 THE CHAIRMAN OF THE SWIRE GROUP MET SIR
PETER THORNTON, THE PERMANENT SECRETARY, MR ROGERS AND OTHERS AT THE DTI. MR ADRIAN SWIRE SAID ''CATHAY HAD BEEN MAKING COMMERCIAL DECISIONS ABOUT BUYING AIRCRAFT FOR OVER 20 YEARS AND THIS
WAS THE FIRST TIME THAT HMG HAD INTERVENED''. SIR PTER THORNTON AFTER SAYING THAT IT WAS THE GOVERNMENT'S INTENTION TO STAND BEHIND THE PRODUCTION OF THE RB211 ENGINE'' THEN EXPLAINED THE IMPORTANCE HMG ATTACH TO CPA'S DECISION: FIRSTLY BECAUSE OF THE DETERIORATING UK BALANCE OF PAYMENTS POSITION, SECONDLY, BECAUSE OF THE NEED TO KEEP EMPLOYMENT GOING IN ROLLS, BUT MAINLY BECAUSE OTHER AIRLINES IN S E ASIA WERE ALSO CONSIDERING WHETHER TO ORDER THE L1911 OR THE DC10. THE DTI PUT THE POTENTIAL ROLLS MARKET THERE AT AROUND PDS STG 150 MILLION AND ALL THIS COULD