Low cost pioneer AirAsia said Friday it will hold talks with flag carrier Malaysia Airlines to acquire its 737-400 aircraft and staff after securing approval to fly most of its domestic routes.

"We will explore the possibility of taking over some aircraft and staff," Kamarudin Meranum, AirAsia's group deputy chief executive officer, told AFP.

Kamarudin said it was obvious that under its rationalistion plan, struggling Malaysia Airlines would reduce its domestic services while the low cost carrier would increase its own.

"We hope to take over some of their staff. We may also look at some of their 737-400 aircraft," he said.

Kamarudin said AirAsia would also consider working with Malaysia Airlines in the engineering section to ensure both carriers co-exist so as to turn Malaysia into an international aviation hub.

"We want to foster good working relations with Malaysia Airlines and this will create two strong carriers in the country and make Malaysia an international hub," he said.

After more than a year, the government yesteray announced that AirAsia would operate more frequent flights and routes to local destinations currently dominated by loss making Malaysia Airlines.

Work out by March 27

Under the rationalisation programme backed by the government, AirAsia would operate all secondary domestic services while also operating on perhaps the 5-10 busiest routes with Malaysia Airlines.

The government has ordered both AirAsia and Malaysia Airlines to identify and work out the division of routes by March 27.

Malaysia Airlines has 39 737-400 aircraft which are primarily used for domestic and regional routes.

Malaysia Airlines has previously announced an aggressive restructuring plan to achieve record profits by 2008 after posting massive losses for the last financial year.

It says that some 114 out of its 118 domestic routes were not profitable.

AirAsia was launched as a budget carrier in December 2001 with just two aircraft and is now southeast Asia's biggest low-cost carrier.