Ailing Malaysia Airlines has launched a scheme costing up to RM850 million (US$234 million) to lay off between 3,000 and 5,000 employees as part of a plan to haul itself out of the red.

"Since the mutual separation scheme is a voluntary exercise, Malaysia Airlines expects the take-up rate from staff to be between 3,000 to 5,000," the national carrier said in a statement.

An official from the airline, who declined to identified, quoted managing director Idris Jala as saying the scheme would cost up to RM850 million.

The Star newspaper reported earlier that the airline expects to spend RM600 million to reduce its 23,000-strong workforce by a quarter.

The voluntary separation scheme is believed to be the largest ever announced in the country's corporate sector, the Star said.

Turnaround plan

Malaysia Airlines said it will offer its staff, excluding contract workers and foreigners, one to three months' salary for every year of service with no cap on the number of years in employment.

The offer also includes a one-off medical benefit payment of RM2,000 per employee, hospitalisation benefits for 12 months and one complimentary air ticket, the airline added.

Under a turnaround plan, announced in March after the airline posted a RM1.3 billion annual loss for 2005, it will surrender all but 19 major domestic routes to budget carrier AirAsia.

The troubled carrier also plans to cut out unprofitable international routes and sell its landmark headquarters in the heart of Kuala Lumpur.

Malaysia Airlines has blamed its losses on crippling fuel prices and lower load factors but hopes to be back in the black by 2007, and to achieve record profitability the year after.