The management of Thailand's AirAsia is in talks to acquire the 50 percent held by Shin Corp, the company sold controversially to Singapore's state-run Temasek last year, an industry source said today.

"They have been talking. The intent (to acquire the shares) is there," the source told AFP on condition of anonymity.

"The management of Thai AirAsia are talking to buy the 50 percent stake," the source said, declining to say how long the negotiations would take.

Thai AirAsia's management, led by Tassapon Bijleveld, chief executive, now holds one percent in the low-cost carrier, with Malaysia's AirAsia budget carrier holding 49 percent, the maximum allowed under Thailand's foreign ownership laws.

Shin Corp's stake in Thai AirAsia is held by Asia Aviation, a company set up last year to bring the airline into compliance with Thai foreign ownership rules.

Shin Corp holds 49 percent in that venture, with the rest owned by Sittichai Veerathummnoon, a Thai businessman.

Controversy arose last year after Thailand's AirAsia was ordered to comply with the country's foreign ownership rules following the sale of Shin Corp, founded by ousted Thai premier Thaksin Shinawatra, to Temasek.

Temasek paid Thaksin's family 1.9 billion dollars for their holding in Shin Corp in a tax free deal which sparked a series of demonstrations against the premier and eventually led to the military coup against him in September.

Temasek subsequently acquired most of Shin Corp, which has an array of interests, most notably in the telecoms sector, but the military government has challenged the deal.

On Thursday, Temasek defended its investment in Shin Corp, saying it would continue to monitor developments in Thailand before making any decision on a possible disposal or reduction of its holding which has dropped sharply in value since its purchase due to the resulting political controversy.