Malaysia-based budget carrier AirAsia today refused to comment on reports that it was in talks to buy Singapore rival Valuair but said it was on the lookout for regional acquisitions.

"We are always looking for opportunities around the region but we have not concluded anything as yet. It depends what the offer is on the table," AirAsia executive director Kamarudin Meranum told AFP .

Singapore's Business Times newspaper reported that AirAsia chief executive officer Tony Fernandes and Valuair chairman Lim Chin Beng met Tuesday to discuss an AirAsia proposal to buy ValuAir for 20 million Singapore dollars.

Citing unnamed sources, it said Fernandes is also believed to have proposed leasing two of Valuair's planes and cutting costs by dropping Valuair's unprofitable routes.

It said that the leasing proposal would benefit both parties by relieving AirAsia's capacity shortage while stemming some of Valuair's losses.

Aviation analysts have said that AirAsia has better prospects elsewhere in the region, particularly China and Indian, than in Singapore which is a highly competitive and regulated market.

"They are not entirely wrong. It is an issue of - what can you get out of those Singapore operations?" said Kamarudin.

"They (Singapore carriers) are having this rationalisation process going on there, so we can't really comment until we know for certain what is on the table."

Only on Tuesday, the Business Times reported that privately owned Valuair had agreed to merge with Jetstar Asia, which is backed by Australia's Qantas, in the first sign of consolidation in Southeast Asia's crowded low-cost airline sector.

AirAsia shares moved higher on the Kuala Lumpur bourse in response to the reported Valuair talks which dealers said would be positive for the carrier.