Australia Awash With Flights, Hurting Airlines, Qantas Says

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Australia’s domestic aviation market is awash with flights, benefiting passengers rather than airlines, said the head of Qantas Airways Ltd.’s (QAN) local business.“There’s a lot of capacity sloshing round the Australian marketplace overall,” Lyell Strambi, chief executive officer of Qantas Domestic, said at a media briefing at Sydney airport today. “Ultimately the winners are the customers.”Enlarge imageThe Qantas Airways Ltd. logo is displayed on a Boeing Co. 747 aircraft in Sydney. Photographer: Ian Waldie/BloombergFlight capacity in the domestic market in the December half is running about 12 percent more than its level last year, whittling profitability for carriers aiming to match the supply of seats to demand, Russell Shaw, an analyst at Macquarie Group Ltd., said by phone Nov. 7. A measure of business-class ticket prices has fallen 40 percent in the past year to two-decade lows as Virgin Australia Holdings Ltd. (VAH) stepped up competition with Sydney-based Qantas, Australia’s largest carrier.There had been “some adjustments in capacity” in the last few months without any significant reduction in growth, John Borghetti, Virgin’s chief executive officer, said on a media call Nov. 20. “Competition is certainly very aggressive now and competition will always be aggressive,” he said.A move announced today by Qantas to switch all services that fly between the Western Australian capital, Perth, and Sydney and Melbourne, to Airbus SAS A330s from May won’t significantly affect domestic capacity, Strambi said.The bulk of additional seats that Virgin is adding come from switching to wide-body jets like the A330 on routes between Australia’s east and west coasts, Borghetti said last week. Qantas’s A330s will replace Boeing Co. 767s on east-west routes, which will be moved to the busier east-coast network, Strambi said today.http://www.bloomberg.com/news/2012-11-25/australia-awash-with-flights-hurting-airlines-qantas-says.html

Wall Street’s Great Scapegoat Hunt

Wall Street has increasingly taken up its old habit of blaming junior bankers and traders for what goes wrong.This is particularly troubling because Wall Street is similar to the military: There is no upside for anyone working in finance to do anything but to follow the orders given by the bosses. The idea of a “rogue trader” is really a myth. The goal at every firm is always to make more money in any way that is legally defensible -- by selling more mortgage-backed securities, by doing bigger and bigger mergers-and-acquisition deals or by making a larger and larger bet on the direction of an obscure debt index.

About William D Cohan

William D. Cohan is the author of the recently released "Money and Power: How Goldman Sachs Came to Rule the World" and the New York Times bestsellers "House of Cards" and "The Last Tycoons."More about William D CohanEnlarge imagePhotographer: Ben Baker/BloombergWhen things go well -- the firm lands a big underwriting or a high-profile merger or executes a profitable trade -- there is no shortage of people around to claim credit. Of course, when something goes terribly wrong -- see “Whale, London” or “Synthetic CDO, Abacus” -- the senior executives disappear from the scene faster than cockroaches when the light is turned on. In return, employees get paid more working on Wall Street -- without putting any personal capital at risk -- than they can at almost any other job on the planet. This is not a subject open to debate on Wall Street. This is the way it is. If you don’t like that bargain, you leave. (Sorry, Greg Smith.)

Botched CDO

And yet, we are now supposed to believe that many things that went wrong leading up to the financial crisis were caused by a handful of junior bankers and traders supposedly acting on their own. Goldman Sachs Group Inc. (GS) and the Securities and Exchange Commission continue to blame Fabrice Tourre, a former Goldman Sachs vice president, for the botched manufacturing and selling of the Abacus 2007-AC1 synthetic collateralized debt obligation. The firm paid the $550 million -- one of the largest fines in Wall Street history -- to avoid an SEC civil suit. Tourre, meanwhile, faces a civil trial set for July. While Goldman Sachs pays his legal bills, he is studying for a doctorate at the University of Chicago and doing humanitarian work in Rwanda. (Anyone want a Free Fab! T-shirt?)This month, the Commodity Futures Trading Commission zapped Matthew Marshall Taylor, another former Goldman Sachs vice president, for allegedly concealing an $8.3 billion trading position in 2007 that cost the company $119 million (the losses were hard to see in a year when Goldman Sachs made $17 billion in pretax profit). The CFTC alleged that Taylor fabricated trades and then obstructed Goldman Sachs’s “discovery of his scheme” by providing “false, misleading or deceptive information and reports.”No so fast, says Taylor’s attorney, Ross Intelisano. His client “strenuously denies all of the allegations”; he never “intentionally entered ‘fabricated trades’”; and it was Taylor who brought the losses to Goldman Sachs’s attention, not the other way around, Intelisano said in a statement. Is what we have here a failure to supervise?Then there is Kweku Adoboli, the former “rogue” trader at UBS AG (UBSN), who is on trial in London for supposedly losing the bank $2.3 billion without any of his superiors knowing. If found guilty, he could spend 10 years in prison.His lawyer, Charles Sherrard, used metaphor to make an insightful point about Wall Street culture. In closing remarks, Sherrard compared his client to Spartacus, the slave-turned- gladiator played by Kirk Douglas in the 1960 movie. Remember the scene in which Spartacus steps up to take the blame for the slave rebellion, but in his defense his fellow gladiators also claim to be Spartacus so that no one can be blamed individually. Well, things turn out differently on Wall Street: Three of Adoboli’s co-workers saw fit to testify against him.http://www.bloomberg.com/news/2012-11-18/wall-street-s-great-scapegoat-hunt.html