TNAG-0514-FCO40-579-Purchase-of-wide-bodied-aircraft-by-Cathy-Pacific-Airlines-1974 — Page 83

RESTRICTED

PA

Mr Stuart

Mr Youde

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RECEIVED IN REGISTRY No. 51

- 7 FEB 1974

HKK 21/12

HONG KONG: CPA PURCHASE OF WIDE-BODIED AIRCRAFT

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1. Miss Welch (DTI CRE2) has given me the following report of a meeting held on 5 February in DTI.

2. The meeting was chaired by Mr Hesletine who was apparently much more relaxed over the issue than he had been previously. The CA2 wished an expert team to go to Hong Kong and question the technical basis of CPA's decision. This was firmly squashed by Sir P Thornton (Permanent Secretary, Aero Space and Shipping) who a pointed out that it was not a DTI's job to promote individual British manufactures. It was finally decided to ask Sir Kenneth Keith, the banker, who has connections with Rolls Royce, if he would talk to either John Swire (in London) or Adrian Swire (who is now in Hong Kong). Even if Sir K Keith agrees to use his good offices in this way the meeting was not hopeful that anything concrete would follow. The Minister asked for a report in ten days time.

3. The meeting agreed that there were two obstacles in the way of CPA buying the Tri-Star. Firstly there was the difficulty of Lockheed's financial position. It appears that this may clarify itself within the next fortnight. The second problem is that whilst Tri-Star would be perfect for most CPA routes, the aircraft is not sufficiently long-haul for certain CPA routes. No decision has been taken on the long-haul version of Tri-Star. CPA understandably wish to select an aircraft which could be used on any of their routes. This would give greater flexibility as well as be easier in respect of servicing, training and spares.

4. Whilst clearly we shall wish to keep an eye on developments it looks now as though the DTI are tackling this matter on the right lines by trying to influence a business decision through commercial means. CRE2 are in full agreement with us that this is a purely commercial matter and will let us know if there are any changes to the present plan.

6 February 1974

M A Goodfellow

This seems all might pro, tem.

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