TNAG-2480-FCO40-3610-Business-matters-in-Hong-Kong-Swire-Group-1992 — Page 50

JOHN SWIRE & SONS LTD

Swire House

59 Buckingham Gate

London SWIE 6AJ

Registered Office

Registered Number 133143 ENGLAND

From Sir Adrian Swire

Chairman

in Richette, HKD

Ats

Ps/ Lord Caithness

ловито AMD

The Rt. Hon. John Major, MP.,

Prime Minister,

10 Downing Street,

LONDON, SW1A 2AA.

HKC 181/7 K

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21

Telegrams

TEMSELOAF LONDON SW1

Telephone:

071-83+ 7717

Fax: 071-630 0353

Teler: 888800

Answer back:

SWIRE G

15th January, 1992.

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20

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A pity he does not m thank the pre for, the Airport Mou! Cathay Pacific Airways: The U.K. Dimension

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i- discussing Mary Kay 24/: shared need i

I am writing about Cathay Pacific Airways (CPA). I am doing this not in my capacity as a Director of CPA, but as Chairman of John Swire & Sons Ltd., the U.K. parent of the Swire Group of which CPA forms an important part.

CPA is, by most standards, a large international airline. It has a current market capitalisation of over £2 billion, and the last reported profit (1990) was a post-tax result of about £200 million. It currently operates from its Hong Kong base to 38 cities in 25 countries, with a fleet of 45 wide-bodied jets, carrying some 7.5 million passengers and over 300,000 tonnes of cargo annually. It directly employs 13,000 staff, including 1,000 cockpit crew. It is the only airline in the world of anything like its size with an all Rolls-Royce powered fleet.

CPA is, however, at something of a watershed, faced at present by certain exceptionally difficult decisions, which include in particular the placing of orders for new aircraft for delivery stretching up to and beyond 1997. Before proceeding with these orders, CPA is seeking assurances: from the Hong Kong Government as to a reaffirmation of their stated air transport policy on the allocation of traffic rights and as to the likely ground rules for what is bound to be a very expensive move to Chek Lap Kok, the new airport in Hong Kong. In addition we are concerned to re-establish Peking's long-term intentions. The successful negotiation and implementation of separate Hong Kong Air Service Agreements is crucial in this latter context; the Foreign & Commonwealth Office and the Department of Transport are well aware of Chinese intransigence on this issue within the Joint Liaison Group, and are doing all they can to sort the problem out, but time is of the essence.

In short, CPA is faced by a simultaneous and formidable combination of factors in the run-up to 1997:- the need for massive re-equipment of its fleet in the period from 1992 to the end of the century, and beyond; the need to uproot its base from Kai Tak and move to the new airport at Chek Lap Kok: and the need to secure, without ambiguity, the confirmation of traffic rights beyond 1997.

Mave a

ASAS

WBS