Local newspapers reported over the weekend that a deal between AirAsia's shareholders, MAS and Khazanah was imminent, and would see Tony Fernandes and Kamarudin Meranun, AirAsia's two principal founders, emerge as MAS shareholders.

The Edge newspaper, a local financial daily, said Fernandes and Kamarudin may take up a strategic stake, but did not report that they were looking to be MAS' single largest shareholder.

MAS, the national airline, has been hit badly by rising fuel prices and the recent global economic crisis. AirAsia on the other hand has seen more and more passengers opt to travel via the low-cost carrier.

Tony Fernandes and Kamarudin Meranun, AirAsia's two principal founders, said in a joint statement that they were not buying a majority stake in MAS, but did not deny that they could be buying a smaller stake.

"We refer to the press coverage over the last two days that has reported that we would become the single largest shareholder in MAS," they said in the statement.

"We wish to clarify that this is not true."

Khazanah, which owns close to 70 percent of MAS, said it viewed aviation as strategic industry and would continue to be the largest shareholder in the national carrier.

"The aviation sector is a strategic sector to the economy and MAS remains a core holding in Khazanah Nasional Berhad's portfolio," the fund said in its statement.

"Khazanah will continue to maintain its position as the single largest shareholder in MAS."

Khazanah also did not deny that AirAsia's Fernandes and Kamarudin may be looking to take up a smaller strategic stake in MAS.

MAS officials were not immediately available to comment.

Copyright Reuters, 2011