The head of low-cost carrier AirAsia ruled out establishing a budget long-haul airline and labelled as "preposterous" a report flagging the move.

AirAsia's Group Chief Executive Officer scotched a report that the carrier's management team was behind the new airline and would submit a business plan to the government.

"It's a preposterous idea," Fernandes told AFP . "I'm ruling it out, I don't see it happening, I don't believe in the model."

The Edge financial weekly, quoting unnamed sources, reported at the weekend that Fernandes and his associates planned to launch the budget long-haul operator by early next year.

One of the routes under consideration was the lucrative Kuala Lumpur to London route currently operated by Malaysia Airlines, it said.

Fernandes said he had considered the idea some four years ago before his involvement in AirAsia, but had been advised it was better to start a short-haul airline.

"I have enough on my plate doing a short-haul airline," he added.

AirAsia was launched as a budget carrier in December 2001 with just two aircraft. It now offers more than 100 domestic and international flights to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines.