Malaysia Airlines and AirAsia call off planned share swap

Malaysia Airlines and the budget carrier AirAsia have called off their proposed share swap deal.

The move comes amid pressure from the workers' union of the national carrier, who feared the tie-up would lead to a restructuring plan with job and salary cuts to help the loss-making carrier return to profitability.

Under the pact reached last August - Tune Air, the parent of AirAsia would have received a 20.5% stake in Malaysia Airlines.

In return, the government investment arm Khazanah would have taken a 10% stake in AirAsia.

The budget carrier's chief executive Tony Fernandes and his deputy Kamarudin Meranun have resigned from the board of Malaysian Airlines as of the end of April.

The two firms will continue plans to collaborate in areas such as procurement, training and aircraft maintenance.

Shukor Yusof from Standard and Poor's spoke to the BBC's Sharanjit Leyl.