CATHAY Pacific Airways is so far shrugging off China's looming challenge to operate an international service from Hong Kong where the carrier sees room for only one. A company owned by China's aviation regulator was serious about following through on an application to operate flights from the territory, Cathay managing director Rod Eddington said yesterday. In Everett, Washington, at a 'roll-out' ceremony for the Cathay's first completed Boeing 777, Mr Eddington said Hong Kong was not big enough to support two international airlines based there. 'The issue is, can a place like Hong Kong, which is a city state with a domestic population of six million, support more than one international carrier? My personal view about that is the answer is no,' Mr Eddington said. 'Not if those carriers are going to remain viable in the long term.' His comments follow a report that China National Aviation Corp (CNAC) had applied for an Air Operators Certificate (AOC), the first step in running a Hong Kong-based airline, and that it intended to compete directly with Cathay. CNAC had already bought its first aircraft, a Boeing 757-200, but Mr Eddington said he did not believe Cathay should be worried. The CNAC recently leased two aircraft from China Southwest Airlines and has begun operating charter flights from a number of Chinese cities into the territory. 'I don't know what CNAC's plans are for that aircraft,' Mr Eddington said. 'I think they're serious [about wanting to challenge Cathay], but I think they're first and foremost serious about operating as a Chinese carrier into Hong Kong. There's a lot of water to go under a lot of bridges yet. 'I'm sure it will be operating into Hong Kong from China as one of the many Chinese carriers operating into Hong Kong. CNAC doesn't even have an AOC yet, therefore it doesn't have any licences to operate.' Analysts have said the CNAC's application was potentially a major blow to Swire Pacific-controlled Cathay, which had already been the subject of speculation that Beijing would not allow a consistently profitable airline to continue operating out of the territory as a virtual monopoly under foreign ownership. Cathay's first Boeing 777 was rolled out of the Everett paint plant yesterday afternoon in a ceremony attended by Boeing senior vice-president Alan Mulally, Mr Eddington and Rolls-Royce managing director John Cheffins. Cathay's 777, the world's largest twin-engined aircraft and the first to be powered by Rolls-Royce Trent 800 engines, is to fly at the end of the month and go into service in the first quarter of next year. It can carry about 350 passengers. The first 777, Boeing's first new model in 13 years, is to go into regular scheduled service with United Airlines on June 7. Cathay, which has placed firm orders for 11 777s and has options on 11 more in a US$2.6 billion deal, has been urging Boeing to announce formally that it will make a 'stretch' version, Mr Eddington said. 'We are particularly keen to see the stretch variation, which we are confident Boeing will launch later this year,' he said. 'Congestion is a problem at Kai Tak. We need a big aircraft with good seat mile costs. For us, the stretch is a critical part of the family.'