The shares of Malaysia Airline System (MAS) and AirAsia have been suspended from trading on the country's stock exchange, amid local media speculation about a possible share swap.

Both companies requested the suspension, said statements on the Bursa Malaysia website. Neither was available for comment on the reasons behind the suspension.

"CIMB Investment Bank Berhad on behalf of [MAS] wishes to announce that [MAS] has requested for the suspension in the trading of their securities with effect from 9.00 a.m. on 8 August 2011 to 5.00 p.m. on 9 August 2011 as the Company requires time to prepare and release an announcement relating to a material transaction."

Media reports emerged in Malaysia over the weekend suggesting a share swap will take place between the two companies, with AirAsia CEO Tony Fernandes getting a majority stake in MAS.

Malaysia Sovereign wealth fund Khazanah, however, issued a statement denying reports that Fernandes was set to become MAS's largest shareholder. Khananah is the majority shareholder of MAS, with a direct holding of 14.06% and an indirect holding of 52.29% through wholly-owned unit Penerbangan Malaysia.

"We refer to media reports that Tony Fernandes and [AirAsia deputy CEO] Kamarudin Meranun will emerge as the single largest shareholder of MAS," said Khazanah. "These reports are incorrect. The aviation sector is a strategic sector to the economy and MAS remains a core holding in Khazanah Nasional Berhad's portfolio. Khazanah will continue to maintain its position as the single largest shareholder in MAS."

Khazanah added that it is constantly looking for ways to improve performance at its portfolio of companies, and that further announcements "will be made at the appropriate time with regard to Khazanah's position in MAS's ongoing transformation plan".

Source: Air Transport Intelligence news