Southeast Asia's biggest low-cost carrier AirAsia today said it remains hopeful the Malaysian government will decide in favour of Subang Airport, the former main airport, for a planned low-cost terminal rather than the new Kuala Lumpur International Airport (KLIA).

"It looks tough but we are hopeful," a senior AirAsia official told AFP on condition of anonymity.

The government was expected to make a decision on the issue during a regular cabinet meeting tomorrow amid increasing speculation it will opt for the newly built KLIA about 50 kilometres south of the capital.

AirAsia began operations at Subang Airport but moved to KLIA in July 2002 in line with the government's plan to make KLIA the main gateway for Malaysia.

AirAsia had since been in talks with the government to allow it to return to Subang Airport and turn it into a dedicated hub for low cost carriers as it would allow the carrier to keep expenses down.

The official said if AirAsia was given the green light to operate out of Subang, it would allow the company "to grow faster" but was resigned to the fact that it may not happen.

"We will abide by the government decision. What is important is that a final conclusion will come out Wednesday. We will make it work if we have to stay at KLIA," he added.

Higher earnings

Chief Executive Officer Tony Fernandes on Monday downplayed concerns that AirAsia would suffer if the government decided to keep the carrier at KLIA.

"Either way, it will be good news for AirAsia," Fernandes said.

AirAsia said Monday that earnings rose sharply in the three months to December and announced that it would buy an additional 20 new Airbus aircraft - raising a previous order to 100.

The carrier said its three months to December net profit rose to RM44.3 million from RM10.5 million in the previous quarter as sales rose 55 percent to RM178.6 million due to a strong pickup in demand.