TNAG-2480-FCO40-3610-Business-matters-in-Hong-Kong-Swire-Group-1992 — Page 59

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Reference

Royce (and the other many UK suppliers to CPA) with China Southern could be considerable.

3.

il

3. On a more political note, the advantages of a close relationship with China Southern are also considerable. the longer term, the serious airlines in China are Air China, China Eastern, China Southern and perhaps something from Fujian (Xiamen Airlines is 50% China Southern). Such a close tie between Guangdong and Hong Kong's airlines can only be good; though they might be spoiled if China Southern had latent designs on fifth and sixth freedoms ex Hong Kong.

4.

I warned John of 3 things. The first was that in dealing with China Southern CPA should be aware of the CAAC Canton entanglement. Secondly China Southern may prefer Shenzhen to Zhuhai as an engine base; they have taken a lease on a large area at Huangtien Airport. Barges could go from there too. And lastly (not least because John is a big bear of a man), CPA should be careful not to swamp China Southern and avoid making any proposals look like a take-over.

I am lunching with Peter Sutch after Chinese New Year and will discuss more with him then.

5.

6. Because of the political aspects of these moves, Mr Kerfoot may want to show HMA. CPA would not, I think, want HKG to know of these plans at this stage.

30 January 1992

Maro

Richard Graham

nan

CC

RG/sd

STC

Mr Kerfoot, Peking Mr Seaton, FED

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