"Trading of AirAsia shares and Malaysia Airlines shares will be suspended to allow the unwinding of the share swap," the senior official, who was familiar with the plan, told AFP on Tuesday on condition of anonymity.
Trading of shares will resume Thursday, he added.
Since taking office in 2009, Prime Minister Najib Razak has embarked on an ambitious programme to overhaul the economy and public sector, including selling off stakes in troubled state-owned companies.
Last August fast-growing flyer AirAsia agreed to acquire 20.5 percent of Malaysia Airlines under a strategic tie-up aimed at turning around the bleeding national carrier.
The deal would have given Malaysia-based AirAsia's CEO Tony Fernandes -- who took over the no-frills carrier a decade ago -- a key voice in salvaging his struggling rival's fortunes.
Malaysia's state investment arm Khazanah Nasional, which previously held nearly 70 percent of the national carrier, would have taken a 10 percent stake in Tune Air, AirAsia's parent company.
But the deal sparked instant opposition from the powerful 15,000-member Malaysia Airlines union, with fears the alliance would result in the downsizing of their loss-making carrier.
With snap elections expected within the next few months the government, which is expected to face a tough fight from the opposition, is unwilling to risk alienating voters.
The source said both airlines would continue to cooperate to cut rising costs by sharing maintenance, training and bulk purchases of parts and aircraft.
Article taken from AFP
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