KUALA LUMPUR (June 22): AirAsia Bhd rose as much as 3% after its audit committee chairman said the group did not consolidate associates' financials as it would be a breach of aviation regulations in countries where the budget airline has a presence.

AirAsia (fundamental: 0.2; valuation: 1.4) has operating units in Indonesia, the Philippines, Thailand and India. "Any change in our present relationship with the asssociate companies, be it in equity shareholdings or shareholders agreement, that gives AAB (AirAsia) legal control will result in loss of the associates’ airline operating licenses," AirAsia audit committee chairman VU Kumar said in a statement today.

In Malaysia, AirAsia shares rose as much as five sen to RM1.66 before paring gains. At 2.44pm, the stock was traded at RM1.64 with some 26 million shares done.

AirAsia was the third most-active stock across Bursa Malaysia.

Kumar's statement today was in response to GMT Research's earlier report that alleged AirAsia had deliberately avoided consolidating its associates’ accounts as it would lead to lower reported profits for the group.

He said AirAsia hoped such allegations were verified "with those responsible before they are put out in the market place".

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)