TNAG-0514-FCO40-579-Purchase-of-wide-bodied-aircraft-by-Cathy-Pacific-Airlines-1974 — Page 59

The Swire brothers confirmed that although the balance of engineering and operating considerations was somewhat in favour of the DC10 the main issue was the Cathay Board's lack of confidence in Lockheed's financial muscle (which you had already reported] As to this, we said that so far as Rolls-Royce were concerned the Government had clearly stated their intentions

in the House on

It was inconceivable that the incoming Government would go back on this. Swires said that there was a certain bias within Cathay in favour of American engines since their engineers were so familiar with them. But they expressed full satisfaction both with Rolls-Royce's position and with the engine itself. They mentioned that there were some problems about servicing to be ironed out and we undertook if necessary to ensure that Rolls-Royce made adequate arrangements. We also offered if necessary to arrange for British Airways engineers to advise Cathay in the light of the arrangements that they themselves were making in preparation for the introduction of Tristars into service.

5. This narrowed the discussion down to the financial muscle of Lockheeds themselves. We said that it was no concern of the British Government to "knock" any of the American aircraft firms. However Boeing and Douglas, no less than Lockheed, had gone through very difficult financial circumstances in the past few

great years and there did not seem to be a good deal to choose between them on this score. In view of their large and successful defence interests, and with the Tristar now showing a profit, Lockheed seemed at least as firmly based as either of the other two major aircraft manufacturers, once they had resolved their immediate cash flow problem. A number of important airlines had bought Tristars and some purchases had recently even been accelerated. These decisions must have been taken in the light of the same factors as Cathay had in mind. Even if Lockheeds were merged with some other company which now seemed less likely it was hardly creditable that the Tristar might be

abandoned.

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