Budget airline AirAsia has held talks with Richard Branson's Virgin Blue Holdings on issues including the possibility of Virgin taking a stake in the local carrier, a top official said today.

"We have had preliminary talks this year. Talks centered on how we can synergise our operations in the region to benefit both carriers.

"For instance, if we fly to Darwin, then how we can synergise our operation together," AirAsia executive director Kamarudin Meranun told AFP.

Kamarudin said the talks, which he described as "non-committal", also touched on Branson taking a stake in AirAsia.

Branson has previously said he was keen to expand Australian budget carrier Virgin Blue's operations and has had discussions with investors looking to set up low-cost carriers in Asia.

Public offering

AirAsia, which flew its first regional route Monday to Thailand, plans to float some 25 percent of its shares in late 2004 to fund an ambitious expansion plan and fight off competition.

AirAsia said the initial public offering (IPO) would be issued "as early as September 2004" and that it was looking at raising 600 million dollars to one billion dollars.

The carrier took delivery of two Boeing 737-300 aircraft in October, increasing its fleet to nine, and it aims to have 22 aircraft by late 2004.

AirAsia has successfully brought low-cost flights to intra-Malaysian travel despite initial forecasts of gloom by aviation analysts and it has now embarked on a programme to spread its wings regionally. - AFP