KUALA LUMPUR (REUTERS) - AirAsia refuted on Monday a report that had said the airline was unwilling to consolidate the accounts of its foreign associates and be more transparent about its finances, saying it was prevented from doing so by aviation regulations.

Little-known Hong Kong-based GMT Research said in a June 10 report that AirAsia is unwilling to consolidate the accounts of its foreign associates.

AirAsia's internal audit committee said in a statement the airline had, in fact, been in talks with its auditors PricewaterhouseCoopers and the local authorities on how it can consolidate its associates, over which it has substantial influence despite being a minority owner.

It was advised that it is unable to do so, however, as it does not have legal control over its units in Indonesia, Philippines, Thailand and India due to local aviation regulations, it said.

The audit committee is chaired by V.U. Kumar, who was appointed an independent non-executive director at AirAsia in August, 2014.

Under local laws, foreign carriers like AirAsia are prevented from owning a majority stake in the associates. That is why AirAsia owns only 49 per cent of AirAsia Indonesia and 40 per cent of AirAsia Philippines.

Any change in the equity holdings of AirAsia in its associates to win legal control would result in those units losing their licences to operate, it said.

The report by GMT Research on June 10 attacked the transparency of the airline's associates and sent its stock down nearly 30 per cent over several days.

The audit committee said it is "somewhat distressed and peeved to have been accused of corporate governance abuses and condoning accounting gimmicks".

AirAsia had said last week that its next quarterly financial statements will reflect the results of its associates, and that its accounts were transparent and prepared in line with global and local accounting standards.