No-frills airline AirAsia has struck a deal with three foreign partners to take up a stake in the profit-making carrier and will issue Islamic bonds to fund the acquisition of new aircraft, senior officials said today.

"I am excited with the latest development. It shows foreign investors have confidence in our country, especially during these troubled times," AirAsia chief executive Tony Fernandes told AFP .

"The airline business now is extremely volatile but a decision by investors to come o­n board demonstrates their faith in the carrier."