Airbus Aircraft A340-500/600  “Website” Order Book   PwC quoted in para  8.67 the Airbus website for A340-500/600  Orders and Deliveries

Exhibit 8.2

Schedule from Airbus website entitled "Orders, Deliveries, Operators - Worldwide dated 31 January 2007 (UK document 2813 - 2817) (PDF) - 153 aircraft sales orders

PwC did this without any adjustment  and/or reference to known industry cancellations from airlines.  It would seem that PwC ignored the well known industry practice of Boeing and Airbus in taking cash payments by way of milestone payments but recognising that major airlines do “cancel” and transfer those monies to other business/aircraft  purchases from Boeing and Airbus, ultimately by commercial agreement.  For example, the 18 A340 600 a/c order from Emirates which it was known from the Farnborough 2006 Airshow were going to be “cancelled” -

  1. the aerospace specialist press   -e.g
    Flight International : 1 August 2006 : Airbus offers Emirates A350/A380 mix in place of A340 -600s (discussed/given to Mr Neill by me  – PwC (e)  “Data from other publications” file ?)
    “Habib Fekih, President Airbus Middle East, concedes that the A340 600 order is a casualty of Emirates’ new fleet plan, and he told Flight International, his preferred option is for it to be  replaced by a mix of A380’s and A350s”,     i.e the cancellation of their  18 aircraft after the A350-1000 XWB launch and A340-500/600 “Enhanced” study was dropped by Airbus/RR.

  2. and in the  General Press – e.g. 
    UK Times : 28 October 2006 – Ends looms for Airbus A340 as Emirates cancels $4bn orders
    (to MAC Directors, E&Y and PwC – DIR44 with my 4 Dec 2006 letter)
    and their conclusion that “ The move effectively kills off the A340”.    Ms Barbara Hadfield of E&Y UK confirmed to us that she had also read this article in a
    7 November 2006 meeting.Which was in turn provided to E&Y (Canada) and PwC and each individual MAC Director in Dec. 2006.

I also referred to the Emirates cancellation in my 29 January 2007 taped interview with PwC at the outset of their “investigation”.  

BL: Including Emirates - 18 A340 600 a/c (ordered Paris Airshow 2003) and Air Canada 3 A340 600 a/c (ordered 1998) - which were effectively cancelled and which was well known within the aerospace industry and on multiple websites.   As subscribers to the annual A340 Teal report PwC would also have read Richard Aboulafia’s remarks in April 2007  re Emirates “Whilst Airbus’s published order book still has them as firm orders, they have been cancelled. Those three Air Canada orders should probably be removed, too.” 

Furthermore could also be read in the PwC report at their Exhibit 8.4 document - Forecast International A340 external market report – April 2007 - included in Significant News “Emirates Cancels Order for 18 A340’s – Following up on the suspension of delivery of an 18-aircraft order estimated to be worth $2 billion, Emirates cancelled its order for A340-600’s in November 2006. The new aircraft were to be delivered over the course of 2009-2011” as {3612} – which PwC provided without any comment. 

PwC are also both airlines public auditors. Therefore this information was known to PwC and in any event publicly available in their Annual Reports from mid 2006/early 2007  - in the Emirates Annual Report:doc {3604A/B} and Air Canada Annual Report:doc {3605C/E}. Also note that Air Canada was and is audited by the PwC Montreal office from the same location as the PwC staff (Ms Leblanc and Mr Moore) who were the primary PwC staff carrying out the A340 “forensic investigation”.   I also understand that PwC were the public auditors of Aerolineas Argentinas (Marsans Group) who had a further 6 A340 600 a/c (ordered 1998) on “indefinite hold” with Airbus since FY2000, and which were also formally cancelled before the Final PwC report was completed at the end of August 2007.

And to put this “Airbus Order Book” matter beyond any doubt, PwC (and E&Y) were provided by me with the letters and DIR files sent to each MAC Director.   With the 4 December 2006 letter to each MAC Director a dossier which contained DIR44 – UK Times article – 28 October 2006 “End looms for Airbus A340 as Emirates cancels $4bn orders” {2642/2643} was included.  These files were also provided to E&Y Canada and UK, whilst Ms Hadfield of E&Y UK confirmed to us in our meeting on 7 December 2006 that she had also read that UK Times article a month earlier.   I also referred to the Emirates A340 600 cancellation in my 29 January 2007 taped interview with PwC at the outset of their “investigation”.  

PwC refer to NONE of this in their “findings of fact” in their C$3m Report.>

Also revealing is the former President and CEO Mr R Neill (now Vice Chairman) -  oral evidence on 14 November 2007










Airbus now more confident?                      (In A340 -500/600  – Feb2007.153 sales orders and referring to Teal forecast) 

Mr Neill 

It’s very technical – aircraft can fly anywhere.


You did not share the pessimism. Your cynicism about that pessimism has been vindicated because you have sold more?

Mr Neill






Q9.8A:           Why did PwC fail to recognise and then document  the A340 500/600 airline cancellations information available publicly and to it??  

Q9.8B:           PwC as a firm publicly make much of their global reach and industry knowledge / experience yet the published Annual Reports (Emirates and Air Canada) and information (Aerolineas Argentines) on A340 -600 for three of their airline audit clients is completely ignored by PwC in their Airbus Order Book analysis – after all there were only 6 outstanding airline orders for multiple aircraft. What was PwC’s motive in completely ignoring and excluding that rudimentary Order Book analysis, (with such an enviable “global source of industry and airline information”), and the consequent implications in one of their key A340 Exhibits (8.2)??