The chief executive of Malaysia's AirAsia has denied considering a possible takeover bid for airline Virgin Atlantic , a Malaysian newspaper reported on Monday.

Tony Fernandes, responding to an unsourced Sunday Times report that he had renewed an interest in the UK airline, told the Star newspaper that no such discussions had taken place.

There are no discussions taking place, he said.

The Sunday Times had reported that Fernandes, who runs Asia's largest budget carrier by fleet size, had previously considered and decided against a bid which could be worth up to 1 billion pounds.

The airline said earlier this month it had received several lines of enquiry about tie-ups with rivals after it hired Deutsche Bank to assess the aviation market.

It said the bank's review was expected to last for several months and did not name those interested in a possible tie-up.

Increased competition from low-cost airlines, weak demand and high fuel prices have combined to squeeze many carriers in recent years.

The low-margin industry has gone through a period of rapid consolidation and analysts believe larger carriers such as Virgin Atlantic need partners to stay ahead of the competition.

(Reporting by Razak Ahmad)

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