TNAG-2480-FCO40-3610-Business-matters-in-Hong-Kong-Swire-Group-1992 — Page 58

1. Mr Toman

Mr Ryan

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2 Mr Steeplej

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Reference

Minute

TC

Mr Currie

CATHAY PACIFIC AND CHINA SOUTHERN

1.

1) cc IW Bunter MKD

Te Muyay 072, 07! ihr Shute BTEL, ATI

Shute

2) per Waiver

interesting. Cathay purking

ahead

fair with China butter. Sare good omen's here for CR experts, esp of RR engines.

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672

At STC's reception for Rolls Royce this week I had a long chat with Stewart John (Engineering Director of CPA) about links with China Southern Airlines. He had a number of very interesting points:

a.

CPA had now decided for the B 777 not the A 330 400 (this would be announced in the next month) and were encouraging China Southern to do the same, not least because the Airbus could not fly non stop to Australia;

b. CPA were also encouraging China Southern to buy the Trent engine on the B 777 (John reckoned total value to the UK of B 777 made in UK elements and the Trent engine was greater than UK content of the Airbus without RR engines);

c.

CPA would propose to China Southern buying cut Lockheed from the GAMECO (aircraft maintenance) jv at White Cloud airport; giving China Southern equity and making it a CPA/HAECO/Hutchison/China Southern jv for maintenance of the China Southern fleet and many of CPA as well. This would be important in the next few years, with Haeco at maximum capacity and CPA/Dragonair's fleet increasing 40% over the next few year.

a.

CPA (through SAE, a joint venture with Jardines) would propose a RR overhaul centre, with China Southern as equity partner. John wants it at Gaolan (the southern tip of Zhuhai, bordering Macau) where SAE already have one site). Engines would go to and from Canton and Chek Lap Kok by barge.

Comment

2. I know from Peter Sutch (MD, shortly Chairman) that CPA has extended co-operation beyond training flights to computer assistance, and that Rod Eddington (MD designate) has had talks with Shenzhen Airport for technical assistance there. But these are much bigger steps, and potentially of greater value, not only to CPA. For the potential spin off for Rolls

CODE 18-77

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/Royce