CATHAY PACIFIC AND CHINA SOUTHERN
ORDERS FOR THE BOEING 777 AIRCRAFT (if raised)
Line to Take
We accept that it is for airlines, rather than governments to
choose the aircraft and engine combination best suited to meet
their needs. However, naturally we hope that any combination
chosen will have a significant UK content.
We hope that China Southern will consider carefully the merits
both of Rolls Royce engines and Airbus aircraft (whether in
combination or not), rather than an all-US airframe and engine
combination. In particular, we hope that they will make a
choice on merit, rather than as a result of political
pressure. If there is evidence that the US is exerting such pressure, HMG may need to become involved in emphasising the technical quality of European airframes and engines.
Background
In July 1991, China Southern Airlines signed a memorandum of understanding for the purchase of six Airbus A330 aircraft. It was expected that these would have General Electric engines, giving them an estimated UK content of 16%.
At the end of the year, it became clear that China Southern was considering withdrawing from this agreement, and was again looking at a rival American aircraft, the Boeing 777.
We have since heard informally that Cathay Pacific is encouraging China Southern to order Boeing 777 aircraft with Rolls Royce Trent engines instead of the A330s. Cathay is developing its relationship with China Southern, and intends to buy the Boeing 777 itself for its long-range services, rather than a stretched version of the A330 (although it has already ordered 10 RR-powered A330s (UK content 37%) for its shorter-range services).
Although the UK content of a Boeing 777 with Rolls Royce engines is greater than an A330 with US engines (approx 25% as against 16%), the UK content of an American-engined B777 is much smaller (less than 5%). Since we understand that China