Debt has always been an efficient tool?

Article in The Star: "Debt raising vital for Khazanah stable of enterprises"

One snippet:

"DEBT has always been an efficient tool for finance and investment and it comes to no surprise that the list of companies that have the largest amount of debt includes some of the largest companies on Bursa Malaysia."

That is a rather remarkable statement in itself. 

I would therefore like to add some counterweight:

"Debt has also always been an efficient tool to bancrupt a company in the fastest possible way".

There are worldwide many, many examples of companies that used too much debt and did not live to tell the tale.

One reason for the increased risk of bancruptcy is that earnings are simply too low (or even negative) to sustain the debt payments.

Another reason is that despite having reasonable earnings a company might run into cashflow problems.

The stable of enterprises of Khazanah might have more options to increase debt even more (through Khazanah), but that might not always lead to the desired outcome and even increase the problem. MAS might be one example in this category.

Also, easier debt from a GLF like Khazanah might give a company a possibly unfair advantage over its privately funded rivals.

An example of a heavily indebted company outside the Khazanah stable is 1MDB, a story that most likely will end very costly for the Malaysian taxpayers.

MAS: disappointing again

I have written several times about MAS, unfortunately not in a very positive way, and I am afraid this posting will not bring much change into that.

A few days ago, the mood was positive:

The Star: "MAS heading for profit, record passenger numbers"

The Edge: "Hot Stock MAS rises 3% on possible 3Q profit"

But it was not to be, the quarterly results were announced today:

One small positive note, as reported:

But that is rather ironic, if we put it into context:

Any company that just received RM 3,074,800,000.00 in cash from its shareholders should show a decent cash position, or not?

May be the only consolation for MAS' shareholders is that AirAsia X also lost money:

MAS and AirAsia fined, but what about the other issues?

The Malaysian Insider (TMI) has an article on the fines that MAS and AirAsia received from Malaysia Competition Commission:


"In August 2011, loss-making flag carrier Malaysia Airlines (MAS) and AirAsia went into a share-swap deal that promised synergies and growth for both rival Malaysian carriers in Asia's nascent open skies regime.

There was no mention of how it would benefit consumers, leading the Malaysia Competition Commission (MyCC) to investigate the now-aborted deal and slap a RM10-million fine on each carrier."


But TMI has more on the story (emphasis mine):


"Perhaps it is time for other regulators and the Public Accounts Committee (PAC) to move in and put Khazanah and other government-linked companies (GLCs) under the spotlight for their business practices.

The PAC should review how these GLCs hire consultants and banks to carry out mergers and acquisitions and other deals that later cost rather than bring in money.

After all, it is public funds that have led to the creation of Khazanah, MAS and other GLCs. And Khazanah's money is in both MAS and AirAsia, and for that matter, CIMB.

Both airlines are public-listed companies. Their shareholders need to know that the share swap was scrutinised to comply with all laws and regulations, not face a fine years later because someone overlooked the anti-trust elements of sharing resources and markets.

MyCC has done its part in protecting the Malaysian consumer. Now it is time for Putrajaya or PAC to do its part in protecting the Malaysian taxpayers' monies."


And with that I can only agree. I think there is much too much financial engineering going on in Malaysia, which does not create any value to the public or to the minority shareholders. If any value is being made, it is by the controlling shareholders and of course to the consultants themselves, in the form of lucrative contracts.

By the way, I think that the high amount of financial engineering clearly indicates a market top. Malaysia had (and will have) some of the largest IPO's in the world, that does look impressive, until one takes into account that many of these companies are (partly) delisted companies. In other words, again the consequences of (too much) financial engineering.


I wrote three articles that are relevant regarding the controversial share swap between MAS and AirAsia:

AirAsia & MAS: conflict of interest?
Probe on AirAsia, MAS share price trends
AirAsia to MAS: Your Loss is my Gain

Highlighted was (amongst other issues) the conflict of interest for the directors involved.

Imagine Tony Fernandes joining a directors meeting with MAS, where he will hear confidential information regarding important issues like future strategy, pricing etc., and where he has a fiduciary duty to act in the best interest of the MAS shareholders.

Some time later he joins a AirAsia directors meeting where he will again hear confidential information, and where again he is expected to act in the best interest of the shareholders, this time those of AirAsia.

Is it actually possible to do that, act in the best interest of two companies that strongly compete with each other? I strongly doubt it.

Next to that, it is quite common that employees (and definitely the higher management) will have a non-compete clause in their employment contract. Does Fernandes have such a clause, working for AirAsia, being an executive director?

Or are we to believe that MAS and AirAsia borrow the following device from Will Smith to erase Tony Fernandes' memory after each board meeting?

MAS should be sold but not at a loss ......?

"Putrajaya should consider selling flag carrier Malaysian Airlines System Bhd (MAS) but not at a loss, its former boss Datuk Seri Idris Jala said today. The Minister in the Prime Minister's Department said MAS was trading at RM6.00 when he was at the helm but currently the share price of the compay has tanked to 30 sen. The government's state asset manager Khazanah Nasional Bhd is the majority owner of MAS, which has posted losses for its last six quarterly results."


The above from an article on The Malaysian Insider. In principle I agree, governments should not run businesses, not in Malaysia or anywhere else in the world.

But Idris Jala mentioned that MAS should not be sold at a loss. Rather puzzling, once the company traded at RM 6 per share, the (in)famous acquisition by Khazanah was even done at RM 8 per share. Now, many rights issues further (which have diluted the value per share), the share is trading at RM 0.31.

The reason why MAS's company valuation has come down so much, is easily summed up by its Group accumulated profits, or rather (as is the case) losses: RM 8,755,439,000.00.

Can one find a potential buyer who will simply "overlook" MAS's patchy earnings history and will pay Khazanah back the price it originally paid for? Very unlikely, I think.

On a personal note, my best investment decisions ever, the ones I am most proud of, were not the ones where I made money on, but the ones where I realized I made a mistake, and sold the shares, even if it was at a loss. I have rarely regretted that.

In other words, not wanting to sell at a loss, when the fundamentals of a company have so much deteriorated, might not be a good strategy, at least in my opinion.

One organisation that also seems to disagree with Idris Jala is the EPF, which has sold down their holding of MAS to below 5% (after which they don't have to declare their trades anymore). In 2010 for instance the EPF still owned 14% of the company.

On Bursa Malaysia's website regarding MAS we can find a "Buy" recommendation by TA Securities Holding, dated March 1, 2013 under the title "The End of a Long Wait?".

Apparently the wait was not yet long enough, less than 3 months later, on May 30, 2013, TA issued a "Sell" recommendation under the title "Likely to Remain in the Red for FY 2013". MAS had again booked disappointing losses, as so often.

For those who think that the airline industry is a bed of roses, please check this website which gives a links to long lists of defunct airlines in the world, per country or continent. Many national airlines can be found there. One interesting airline mentioned on the list is "Malaysia-Singapore Airlines":

"Malaysia-Singapore Airlines (MSA) came into being in 1966 as a result of a joint ownership of the airline by the governments of Malaysia and Singapore. The airline ceased operations after 6 years in 1972 when both governments decided to set up their own national airlines. Hence from that year onwards, Malaysian Airline System, now called Malaysia Airlines, and Singapore Airlines were formed."

The financial situation of Singapore Airlines (SIA) is rather different from MAS, the below amounts are in millions of SGD:

Protons marketshare slipped from 80% to 18%

Pretty astonishing statistics in an article from The Malaysian Insider:

"At its peak, four of every five cars sold in Malaysia was a Proton, but the carmaker is now in danger of slipping into third spot in sales behind Toyota and Perodua, the second national car company that has ruled the roost for over six years.

Industry sources told The Edge newspaper in an article published today that Proton saw its market share slip in December 2012 to just 17.7 per cent, with Toyota now a close third at 17.1 per cent share of passenger vehicle sales in the country.

“Perodua (Perusahaan Otomobil Kedua Sdn Bhd) is the runway market leader while Proton over the last few years has been a strong second. Now Toyota is closing in on Proton’s position,” an unnamed executive told the financial daily.

Proton is controlled by Tan Sri Syed Mokhtar Al-Bukhary’s DRB-Hicom.
Proton was established by Tun Dr Mahathir Mohamad in 1983 and became a poster child of the former prime minister’s industrialisation policies.

Dr Mahathir had made it patriotic to buy a Proton, but the company has seen its sales slump in the last decade due to increasing liberalisation of the Malaysian market."

I wrote before about my home country, The Netherlands. Dutch people seem to be more practical then Malaysians, at least when things don't work out: just move on, even if it means taking a loss.

The Netherlands has a company dealing with cars, trucks etc, DAF, but in 1975 it sold of its passenger car division to Volvo in 1975. Dutch people had the same love-hate relationship with its (only) homegrown car as Malaysian have with Protons. The DAF passenger car was as ugly as the Proton Saga.

Holland also had one steel company, Hoogovens, it first merged with British Steel and was later sold to Tata Steel from India. Malaysia is still stuck with its steel industry, Perwaja Steel is rumored to have lost about RM 10 Billion.

KLM, the royal Dutch airlines, merged in 2004 with the much larger Air France. Malaysia Airlines continues to be a big headache, with huge accumulated losses of around RM 8 Billion.

For the people in charge, there might be a lesson here.

MAS, where is the transparency? (2)

In addition to the previous posting on MAS, an new announcement has been made to the Bursa Malaysia.

a)        the parties in KLHC Suit No: S3-22-634-2006 will complete the Sale and Purchase Agreement dated 16 June 1997 (“SPA”) in which MAS purchased certain lands in Langkawi. MAS had sought to enforce the SPA by way of specific performance. This will result in the remaining land purchased (a 21 acre portion of the land held under HS(D) 623, Mukim Ayer Hangat, Daerah Langkawi) to be effectively transferred to MAS upon payment of the agreed balance purchase price of RM4,001,622.50 that is still outstanding under the SPA;

b)        all Counter-claims in KLHC Suit No: S3-22-634-2006, KLHC Civil Suit No: S7-22-487-2006 and SAHC Civil Suit No: MT3-22-365-2006 are to be withdrawn against MAS and parties related; and

c)        MAS and parties related will withdraw its claims in the above legal suits.

There is no adverse financial or operational impact on MAS arising from the settlement. MAS will not be incurring any financial or operational loss.

I find the announcement puzzling at best, and it throws up more questions than it answers, for instance:

• What are the details of the SPA of 1997?
• Why does it take 15 years to complete the SPA?
• The claims against TSDTR and others were very specific and serious in nature, totalling many hundreds of millions of RM, why are they settled with a parcel of 21 acre land which even has to be purchased?

The claims, as detailed in the 2011 year report:

The Annual General Meeting of MAS has just been held, so shareholders have to wait almost one year to air their possible grouses regarding this settlement.

I doubt if they are happy with the performance, this is the 5-year chart of MAS:

MAS, where is the transparency?

MAS made an announcement regarding the suit with former executive chairman Tan Sri Dato' Tajudin Ramli (TSDTR). This is an imporant suit, and it has been dragging on for a long time (TSDTR was attached to MAS until 2001, 11 years ago). The content of the announcement:

"We wish to announce that MAS and TSDTR have reached an agreement to settle the legal suits concerned on terms. As a result, the legal suits and all counter-claims in the legal suits against MAS will be withdrawn."

Is that all the information the shareholders of MAS receive? Where is the transparency in this?

According to this article:

"(Tajudin) has agreed to surrender valuable land in Langkawi where the Four Seasons Hotel stands,” a court source told The Malaysian Insider on condition of anonymity.

But if that is true, why is it not revealed in the announcement to Bursa Malaysia?

From a corporate governance point of view, this looks not good.

Unauthorized upgrades cost MAS 200 million a year?

The following link from Rocky Bru's blog is pretty damaging for MAS, if the allegations are indeed true:

"Malaysia Airlines has uncovered a ring involving some senior executive who have been enriching themselves by upgrading thousands of Economic Class passengers to Business Class every year, denying the financially-strapped national carrier of much-needed revenue.

Last year alone this syndicate let go over 50,000 upgrades without getting prior approval from those authorized to do so. I am not sure how they made money from "selling" these upgrades or if they were in cahoots with travel and tour agents, but by end last year the malpractice had cost the national carrier more than RM200 million in lost income!"

My family used to travel quite frequently with MAS, we were all member of their Enrich loyalty program, but somehow or the other, we almost never received our airmiles in our accounts. Our travel agent would key in our names and membership numbers, I would check the names and numbers, at the counter they would check the names and numbers and at the gate and immigration they would again check the names. Surely so many people couldn't be wrong?

I filled in lengthy claim forms, submitted them to Enrich and would get finally the miles back months later. This happened again and again, after which I was fed up and wrote a letter to the head of Enrich. I was phoned back by a lady who apologized, and asked me the details of the last holiday so she could help me claim back the miles. However, I was not interested to go down that path again, I wanted her to tell me what exactly went wrong, so that we could prevent that from happening again. She didn't give a clear answer, I handed over the data and months later I received the miles. 

In the mean time we found out that other people had similar problems getting their miles, they were used to claim back the miles afterwards and wait a long time for them to appear on the statements.

The next trip with MAS the same happened, we received no airmiles. I wrote again a letter to the head of Enrich, and suggested there might even be fraud involved, those airmiles are worth quite a lot of money. I was phoned back by the same lady, she was 100% sure there was no fraud involved (not sure how anybody can be 100% sure), again she could not explain what actually went wrong, and again I finally received my miles much later.

This happened a few more times after which my family decided that enough was enough, we changed to Singapore Airlines, and not a single mile was ever misplaced by them.

I have been in the IT industry for about 30 years and I can't believe software systems can be that bad that a huge amount of the allocations go wrong. It should be relatively easy to trace down and correct the error. Including the testing it should not take more than a few days, a fraction of the time needed to proces all the air miles claims forms MAS must have received.

The article of Rocky Bru sets me thinking, is it possible that our unclaimed airmiles somehow or the other ended up with other people who used them to upgrade their tickets? 

AirAsia to MAS: Your Loss is my Gain

Received the following research report from a friend:

Your loss is my gain

Winds of change are swirling in the Malaysian aviation industry. AirAsia yesterday announced frequency additions on routes left behind by MAS/Firefly. In the process, AirAsia’s market share will increase at the expense of the national carrier, and yields are likely to improve. We maintain our Outperform rating and target CY13 multiple of 7x. AirAsia is likely to see strong earnings growth in 2012 because the competitive environment in Malaysia has become more benign. Its venture into Japan and Philippines will drive growth as well. 

What Happened

AirAsia announced yesterday that it will, from February 2012, increase frequencies from Kuala Lumpur to Kota Kinabalu (KK) and Sandakan, as well as from KK to Hong Kong, partially taking over capacity that has been or will be abandoned by MAS and Firefly. It also announced expected long-haul route cuts to Rome, Johannesburg, Cape Town, Buenos Aires, Dubai, Damman and Karachi, and its pullout from short-haul routes like the daily Langkawi-Penang-Singapore flights and KL-Surabaya. MAS’s route cuts will take effect in January 2012.

What We Think

The developments are in the direction of our expectations. The announcements of frequency additions by AirAsia and route removals by MAS are some of the CCF’s most tangible benefits to AirAsia. AirAsia will continue to garner more market share next year as it fills part of the void left behind by the capacity reductions. Its yields will also improve following the removal of Firefly as an LCC competitor and MAS’s selective pullout of routes to East Malaysia. Apart from that, MAS is likely to stop plying international routes from its KK hub, which are currently not profitable. This is an excellent opportunity for AirAsia to expand further. Given its much lower cost base, it is likely to be able to earn profits from these routes. 

What You Should Do

This is definitely the time to load up on AirAsia. We have a high conviction Outperform call on this stock, which is one of our top picks for Malaysia in 2012. We think this airline will do very well next year despite the  high jet fuel price. The listing of its Thai and Indonesia associate next year will further catalyse the stock.

MAS/Firefly route cuts provide opportunities to AirAsia

AirAsia said during its 3Q11 results conference call last month that it was adding two leased A320s to its Malaysia fleet in 4Q on top of the three new aircraft deliveries that Malaysia will be allocated this year. The reason for this move has now been made very clear. AirAsia is using the opportunity provided by the withdrawal of MAS and Firefly from several domestic and regional routes to expand its schedule and network capacity. In other words, AirAsia is expanding on the back of opportunities left behind by MAS and Firefly, by at least partially restoring the capacity removed by the two latter airlines and taking the rest of the benefits from potentially higher ticket prices/yields since net capacity on the relevant routes will still be reduced as the capacity withdrawals exceed capacity additions by a large margin.

Firefly has stopped its domestic LCC business; AirAsia takes advantage by expanding frequencies to KK and Sandakan

In mid-November 2011, Firefly stopped selling tickets on the 189-seater B737-800 planes on routes between KL and KK, Kuching, Sandakan and Sibu. Not coincidentally, AirAsia yesterday announced that it will from 6 February 2012 increase its KL-KK flights from 13 to 14 times/day and step up its KL-Sandakan flights from two to three times/day. This shows that AirAsia is taking over some of the capacity abandoned by Firefly. Additional frequencies by AirAsia to Kuching and Sibu cannot be ruled out.

AirAsia planning increase in KK-HK frequencies in anticipation of MAS withdrawal

MAS has not announced definite cuts to its international routes from the KK hub but earlier indicated that these are on the chopping board. In anticipation of the MAS move, AirAsia will from 21 February 2012 increase its KK-Hong Kong flights from seven times/week (once daily) to 10 times/week, a net increase of 24 one-way flights/month. MAS is currently flying 56 times/month on the KK-HK route. Hence, if MAS abandons the KK-HK route altogether, there will be a net 15% reduction of capacity (Dragonair also serves the route).

From KK, AirAsia also flies to Taipei and Shenzhen, and may benefit from reduced competition to Taipei if MAS pulls out. AirAsia does not currently fly from KK to Seoul, Perth, Tokyo or Osaka. However, if MAS cancels its flights from KK to the latter four destinations, it may open up new route opportunities for AirAsia.

MAS may withdraw from KL-Tawau/Sibu, potentially leaving AirAsia as the monopoly operator on the routes 

We believe that MAS is also likely to announce in the near future reductions to its West Malaysia to East Malaysia crossings. While we do not expect MAS to reduce frequencies on truck routes like KL-KK/Kuching, it could cut less profitable routes like KL-Tawau/Sibu. The airline currently flies 11 times/week on KL-Tawau while AirAsia flies 21 times/week. On KL-Sibu, it flies 14 times/week while AirAsia flies 35 times/week. Hence, AirAsia dominates the capacity on these two routes and the domination could turn into a monopoly if MAS axes these routes. We believe MAS will retain KL-Miri/Labuan/Bintulu as there is likely to be more business traffic on these routes and average ticket pricing should be higher.

To me this sounds like really bad news, [1] from a corporate governance point of view (Tony Fernandes being the CEO of AirAsia, director of AirAsiaX and director of MAS, a clear conflict of interest), [2] for the minority investors of MAS (it seems from the above report that MAS gets the short end of the stick), and [3] for the consumers (on many routes, a duopoly is turned into a monopoly).

The writer of the report advises to load up on AirAsia shares. I will not give investment advice to the readers of my blog, but would like to point out that there are many (serious) corporate governance and accounting issues regarding AirAsia: http://cgmalaysia.blogspot.com/search/label/AirAsia

The readers should make their own decision.

Probe on AirAsia, MAS share price trends

Above is the graph of the share price of AirAsia and Malaysian Airlines System (MAS), the vertical line represents August 5, 2011, just before the announcement of the share swap between AirAsia's parent and Khazanah Nasional.

The starting point on the left is April 19, 2011, with AirAsia's share price on RM 2.61 and MAS on RM 1.81.

On August 5, 2011 the price of AirAsia was RM 3.95 (+51%) and the price of MAS was RM 1.60 (-12%).

On August 12, 2011 AirAsia's share price fell to RM 3.45 (-13%) since the announcement while MAS share price went up to RM 1.87 (+17%).

The prices of the shares of both companies before the announcement of the deal are significant, since they were used to price the share swap.

These are multi billion RM companies, if there was indeed insider trading or any other suspicious trade going on, evidence should not be difficult to gather, the amounts of shares involved would be massive.

I am hoping for a speedy probe by the authorities with transparant reporting back to the investment community. The movements of the share prices before and after the announcement do indeed look suspicious, the volume traded was also much higher than normal.

From a Corporate Governance point of view, the fact that the two key people behind AirAsia suddenly become Director and major shareholder in the largest competitor is very worrisome. I simply fail to see how they can avoid conflict of interest situations or how they can act in the best interests of both companies at the same time.

The Securities Commission (SC) and Bursa Malaysia Securities will investigate the change in trend in the share prices of AirAsia Bhd and Malaysia Airlines following the suspension of trade on both the counters on August 9.

Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, said the SC and Bursa Malaysia will be studying the matter.

The SC and Bursa Malaysia will also monitor closely the share price movements from time to time including any unusual activity in terms of price and trade volume, he said.

Najib said this in his written reply to a question from Wee Choo Keong (Independent-Wangsa Maju) who wanted to know if the SC and Bursa Malaysia were aware that the share price of AirAsia had been on an uptrend and that of MAS was on a downtrend before the suspension of share trade on August 9.

Wee also sought an explanation on why the share price of AirAsia started to rise from July 20, 2011 on an unprecedented trend till the date of the share suspension with its share closing at RM3.95 sen while MAS closed its share at RM1.60 sen.

This trend however reversed later with the share price of AirAsia going down and the share price of MAS going up, Wee said.--Bernama

By Liau Y-Sing
KUALA LUMPUR, Aug 8 (Reuters) - Malaysian Airline System (MAS) and rival AirAsia are planning a share swap that would give AirAsia's parent a 20 percent stake in Malaysia's national airline, a source with direct knowledge of the deal said on Monday.

Under the deal, Malaysia's state investment arm, Khazanah Nasional, which currently owns close to 70 percent of MAS, would take a 10 percent stake in AirAsia, said the source who asked not to be identified because the deal has not been announced.

"This will help to improve synergies between the two," the source said. "They have been competing unnecessarily in the past and they will now pool their resources together."

AmResearch in Kuala Lumpur said in a note on Monday that the share swap could position MAS as a premium, long-haul carrier, while AirAsia takes on the domestic, short-haul network.

The share swap is expected to aid MAS, which has struggled to stay profitable, although it would be the second time in 10 years that the national carrier is being restructured to help its bottom line, analysts said.
AirAsia's chief executive, Tony Fernandes, and his deputy Kamarudin Meranun, will sit on the board of MAS after the restructuring, the source said, adding that CIMB is the deal's adviser.

Officials at MAS and Khazanah Nasional were not immediately available for comment. AirAsia officials said the airline would make a statement within a day or two.

The two airlines halted trading in their shares until Tuesday, saying separately they need time to prepare an announcement relating to "a material transaction."

Khazanah Nasional and AirAsia shareholders had denied on Sunday reports that Air
Asia's shareholders will emerge as the largest owners of national carrier MAS shares.


BACK TO MONOPOLY?
The global aviation sector has been hit by rising fuel prices and economic instability, but MAS and AirAsia have adopted different strategies to deal with the challenges.

MAS managing director Azmil Zahruddin told Reuters in March that the airline was prepared for a stronger future, although the Japan earthquake in March posed a challenge.

In May, MAS posted a first quarter net loss of 242.3 million ringgit ($80.4 million) compared to a profit of 310.6 million ringgit a year earlier, after a decent FY2010 that saw its net profit surpass expectations of a net loss.

In 2001, the authorities bailed out the then loss-making MAS with about $472 million of state money, drawing fierce criticism from investors who painted the deal as government interference in the market.
"AirAsia was set up to liberalise Malaysian skies, but with this partnership, I see us going back to monopolies," said another aviation analyst with a local bank. "At the end of the day, it's the consumers who will suffer as monopolies usually mean higher airfares."

AirAsia recorded a net profit of 171.9 million ringgit in the first quarter, down almost 25 percent from a year earlier. It is on a regional expansion drive, with a source saying it had recently drawn up plans to buy an extra 100 Airbus A320neo jets, potentially taking a record-breaking order to 300.

The budget carrier plans initial public offerings in Bangkok and Indonesia as it capitalises on demand in the region for cheap air travel.

AirAsia shares last traded at 3.95 ringgit before they were suspended, up 56 percent since the start of the year, while MAS' stock was last traded at 1.60 ringgit, down 23 percent so far this year. The overall index has fallen 2.4 percent since the start of the year.

AirAsia & MAS: conflict of interest?

A long and interesting article from the Wikipedia website about the Board of Directors, their powers, duties and responsibilities, etc.

http://en.wikipedia.org/wiki/Board_of_directors

One paragraph in particular looks interesting:

"Competing with the company
Directors cannot compete directly with the company without a conflict of interest arising. Similarly, they should not act as directors of competing companies, as their duties to each company would then conflict with each other."

On August 11, 2011 Tony Fernandes, Group CEO of AirAsia, was appointed director of Malaysia Airline System, the direct competitor of AirAsia. Is there no conflict of interest there?

Whenever angel investors invest in a company they will put in special conditions for the founders: founders are not allowed to work for another company, they are not allowed to invest in another company in the same industry and after quitting the curent company they are not allowed to work in the same industry for a few years. All will be written down in the shareholders agreement and the employment contract with the founders. To balance things out, angels often promise not to invest in other companies in the same industry without prior permission.

To me these rules are completely normal and generally accepted, I never had any problem dealing with founders regarding the above, I never met a founder who had problems with these restrictions.

But when companies are a thousand times larger (like AirAsia and MAS) these restrictions don't apply anymore?