Shares in budget carrier AirAsia surged more than seven percent today on speculation it is poised to announce the launch of long-haul routes in an alliance with European low-cost carriers.

AirAsia said it would hold a press conference on Friday along with Malaysia's transport and tourism ministers, to unveil "a revolutionary service that will change the face of aviation travel forever".

The airline's stock closed up RM0.11 ringgit or 7.28 percent at RM1.62.

The Star newspaper reported this week that AirAsia is planning to team up with Richard Branson's Virgin Group and EasyJet to launch "the world's first low-cost global network".

The Star citing unidentified industry sources as saying the new joint venture would first fly between Kuala Lumpur and Manchester in Britain and Amritsar in India.

There are future plans for flights to Hangzhou near Shanghai, China and Tianjin near Beijing, it said.

AirAsia's chief executive officer Tony Fernandes has previously said that there was huge potential for a budget long-haul air service.

"It is just a matter of time before someone comes up with a good model for a low-cost carrier and I hope the innovation would come from Malaysia," he said late last month.

However, financial analysts questioned whether the low-cost long-haul service would be viable.

"There will always be demand for cheap flights, short- or long-haul. The issue is whether revenue will be sufficient to offset the costs of running the flights," CIMB Research said in a note.

"We prefer AirAsia to remain focused on its short-haul routes," it added, noting however that an allaince with Virgin Atlantic and EasyJet could produce an innovative new model.