Budget airline AirAsia has began preliminary talks with Macau airport authorities over possible flights, chief executive officer Tony Fernandes said today.

"We had talks about three weeks ago with the Macau authorities. I will be suprised if we can do it this year. There is a lot of costing and feasibility work to be done," Fernandes told AFP .

"For now, we will concentrate on enhancing our domestic and regional routes," he said, adding: "The Macau airport authorites are prepared to talk. That attracts me."

AirAsia, which flew its first regional route on Dec 8 to Phuket, plans to float some 25 percent of its shares in late 2004 to fund an ambitious expansion plan and fight off competition.

It begins to fly to Bangkok from Jan 15 out of Kuala Lumpur International Airport and from Senai Airport, in the south, in February.

More destinations

AirAsia has said its initial public offering (IPO) would be issued "as early as September 2004" and that it is looking at raising US$600 million to US$1 billion.

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.

It will fly to neighbouring Indonesia next month in a move to capture a share of the market in Southeast Asia's most populated country.

The likely destinations are Surabaya and Denpasar with Medan at a later stage.

Indonesia would be AirAsia's second regional destination after Thailand.

It has held talks with Richard Branson's Virgin Blue Holdings on issues including the possibility of Virgin taking a stake.

AirAsia has successfully brought low-cost flights to intra-Malaysian travel despite initial forecasts of gloom by aviation analysts. - AFP