TNAG-0514-FCO40-579-Purchase-of-wide-bodied-aircraft-by-Cathy-Pacific-Airlines-1974 — Page 90

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5. IT SHOULD BE REMEMBERED HOW SLIM THE COMPANY'S RESOURCES ARE.

THEY COULD NOT POSSIBLY ABSORB THE LOSS THAT THE IMPLICATIONS OF PARA. 2(A) COULD INVOLVE, HOWEVER UNLIKELY THIRD PARTIES MIGHT CLAIM THESE TO BE.

6.

INCIDENTALLY, THEY SAID THAT THE PURCHASE OF DC 10'S ALSO

INVOLVED THE PURCHASE OF A FLIGHT SIMULATOR WHICH WOULD BE OF BRITISH MANUFACTURE AND WORTH ABOUT POUNDS 2 MILLION.

7. I DO NOT WISH TO PUT MYSELF IN THE POSITION OF ADVOCATE FOR

CATHAY PACIFIC AS CLEARLY I CANNOT EVALUATE THE COMPLEX TECHNICAL

AND FINANCIAL DETAILS, BUT I DO STRONGLY URGE THAT MR. HESSELTINE SHOULD SEND FOR ADRIAN SWIRE SOON AFTER THE LATTER'S RETURN TO THE

U.K. ABOUT 14TH FEBRUARY SO THAT HE CAN HEAR THE LATTER'S

OWN REASONS FOR THE DECISION DIRECT. CONCEIVABLY THERE IS SOMETHING

THAT H.M.G. COULD OFFER THAT WOULD TIP THE SCALES THE OTHER WAY,

THOUGH FROM WHAT SWIRE SAID THIS SEEMS UNLIKELY SINCE THE DECISION

TURNS NOT ONLY ON THE PERFORMANCE AND RELATIVE STATE OF DEVELOPMENT

OF THE TWO AIRCRAFT, BUT ALSO ON A JUDGEMENT OF THE RELATIVE

STABILITY AND PROSPECTS OF THE COMMERCIAL DIVISIONS

OF DOUGLAS AND LOCKHEED AT THIS TIME.

B*

I REALISE THE EMBARRASSMENT THAT WILL BE CAUSED BY A FURTHER

SIGNIFICANT HONG KONG CONTRACT BEING WITHOUT U.K. CONTENT, BUT

! DO NOT SEE IN WHAT WAY WE CAN PUSH THE FIRM AGAINST ITS

COMMERCIAL JUDGEMENT OR OFFER IT ANY GUARANTEE AGAINST THE RISKS

WHICH IT FORESEES IN THE PURCHASE OF THE LOCKHEED. THOUGH HONG KONG'S DESIGNATED CARRIER, IT IS A PRIVATE COMPANY AND THERE

COULD BE NO QUESTION OF SUPPORT FROM PUBLIC FUNDS IF IT WERE IN

DIFFICULTIES.

9. THE FIRM THEMSELVES ARE VERY CONSCIOUS OF THE DISAPPOINTMENT

THEY ARE CAUSING AND ARE PARTICULARLY DISTRESSED SINCE IT IS OF

COURSE NOT THE BRITISH ENGINE BUT OTHER CONSIDERATIONS THAT

TIPPED THE SCALES. THEY WOULD GLADLY CONSULT YOU ABOUT WHETHER

THERE WAS ANYTHING THEY COULD SAY WHEN THE LETTER OF INTENT IS

SIGNED THAT WOULD BE HELPFUL, EITHER IN A PUBLIC STATEMENT OR PRIVATELY (E.G. TO THE CHINESE).

MACLEHOSE

ALLOT DISTRIBUTION

M & TD HKIOD

[ADVANCED TO DTI (CAD)]

2

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