TNAG-0514-FCO40-579-Purchase-of-wide-bodied-aircraft-by-Cathy-Pacific-Airlines-1974 — Page 95

CO HONG KONG

00 BCARFE HONG KONG

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FM D T 3118552

CONFIDENTIAL.

RECEIVED IN REGISTRY No. 51

- 6 FEB 1974

NKK 2112

Mr You

17. Goodfellow

MTD

Гакед

не Taylor

Another mass turit portem (albeit

or a smaller scale and without the toy Kay Gout being directly and in wowed) about

TO IMMEDIATE GOVERNOR HONG KONG TELEGRAM NUMBER JANUARY 1974 AND TO BCARFE HONG KONG.

PURCHASE OF WIDE-BODIED AIRCRAFT.

31

which we have only just hean in formed

A0Q1/2

DTI HAVE BEEN KEEPING IN CLOSE TOUCH WITH CATHAY PACIFIC AND SWIRES, FOR SOME MONTHS, REGARDING CPA'S EVALUATION OF ALTERNATIVE WIDE-BODIED AIRCRAFT. THE UNDERSTANDING WAS THAT, IN VIEW OF BRITISH

INVOLVEMENT IN TRISTAR, DTI WOULD BE KEPT IN THE PICTURE AS THE EVALUATION PROCEEDED, AND THAT NO FINAL DECISION WOULD BE TAKEN UNTIL THEY HAD BEEN INFORMED OF CATHAY'S CONCLUSIONS.

2. THE ORIGINAL CONTENDERS WERE BOEING 747, DC 10 AND TRISTAR. AT

A FAIRLY EARLY STAGE, THE 747 WAS ELIMINATED, LEAVING THE CHOICE TO BE MADE BETWEEN THE DC 10 AND TRISTAR. OUR UNDERSTANDING WAS THAT THESE TWO WERE STILL RUNNING NECK AND NECK.

3. WHEN BLUCK WAS HERE EARLIER THIS MONTH, DTI UNDERSTOOD THAT CATHAY HAD NOT YET COMPLETED THEIR EVALUATION BUT THAT IN ANY CASE

THE BOARD WAS EXPECTED TO DECIDE (AT ITS MEETING IN HONG KONG LATER THIS MONTH) TO DEFER A DECISION ON ANY PURCHASE OF NEW AIRCRAFT FOR SIX MONTHS WHILE THEY WAITED TO SEE HOW THE ECONOMIC SITUATION

DEVELOPED IN THE FAR EAST.

4.

HOWEVER ON 29 JANUARY SWIRES INFORMED ROGERS DTI THAT AT A CPA BOARD MEETING THE PREVIOUS DAY, A DECISION HAD BEEN TAKEN TO SIGN A LETTER OF INTENT TO PURCHASE TWO DC 10S AND THAT A PRESS ANNOUNCEMENT WOULD BE MADE ON 31 JANUARY. FOLLOWING CONTACTS BETWEEN

ROGERS AND JOHN SWIRE (AND BETWEEN THE LATTER AND BREMRIDGE IN HONG KONG) CATHAY HAVE NOW AGREED TO DEFER MATTERS FOR ONE MONTH IN ORDER TO ALLOW TIME FOR FURTHER CONSIDERATION. MCDONNELL DOUGLAS HAD STIPULATED THAT IF THE LETTER OF INTENT WAS NOT SIGNED BY 31 JANUARY, A PENALTY OF US 200,000 DOLLARS WOULD HAVE TO BE PAID: BUT

THEY HAVE NOW AGREED TO WAIVE THIS.

5. JOHN SWIRE SAW MR HESELTINE (MINISTER FOR AVIATION AND SHIPPING)

THIS MORNING AND THE MINISTER MADE PLAIN TO HIM THE INFERENCE THAT

WOULD BE DRAWN IF A BRITISH AIRLINE WERE TO DECIDE AGAINST TRISTAR

IN A CLOSE RUN COMPETITION OF THIS KIND. CATHAY'S DECISION COULD

NOT THEREFORE BE TAKEN IN ISOLATION.

6. WE ARE NOW CONSIDERING HOW BEST TO FOLLOW THIS UP. GRATEFUL FOR

YOUR URGENT ADVICE.

DOUGLAS-HOME

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