AirAsia and Jetstar in merger talks

KUALA LUMPUR, Dec 23 (Reuters) - Malaysian low-cost airline AirAsia Bhd (AIRA.KL) is in talks to merge with the budget carrier of Australia's Qantas Airways Ltd (QAN.AX), a Malaysian newspaper reported on Tuesday citing an unnamed source.

The possible merger between AirAsia and Jetstar could involve a share swap and would help the carriers cope with the impact of slowing demand worldwide as the global economy weakens, The Star newspaper said.

Merger talks are at a preliminary stage, the report said.

Asked to comment, AirAsia Chief Executive Tony Fernandes told the newspaper: "We are always talking and looking at ways to strengthen AirAsia into a global brand.

A Qantas spokesman told the paper: "We talk to airlines all the time about possible partnerships, relationships and cooperative agreements."

Qantas and British Airways (BAY.L) had earlier this month called off talks for a $6.4 billion merger.

Fernandes has said that AirAsia may be taken private. (Reporting by Liau Y-Sing; Editing by Kazunori Takada)