(AFP) Loss-making Malaysia Airline System (MAS) may ground at least 10 aircraft and slash its workforce by 3,000 as part of a overhaul plan to remain afloat, according to a report today.

The Business Times newspaper, citing industry sources, said the number of aircraft MAS would be forced to leave idle is more than the expected eight as the carrier honours purchases made before the current global slump in the airline industry.

"Re-routing and cancellation of destinations plus purchases of new aircraft would see at least 10 aircraft being grounded from the expected eight," an unidentified source said.

"Overtime is now only being given on a case-by-case basis, even for important areas like the engineering department," the source said.

The sources told the newspaper the cash-strapped airline would try to formulate an early retirement plan for its employees under the planned voluntary separation scheme.

They said the separation plan would be the first in a series of moves to bring Malaysia Airlines' expenditure down, with a worst case scenario of a possible loss of 10,000 jobs in order for the airline to operate efficiently.

Unprofitable routes

The sources said the company's plan to seek fare increases for the Peninsular-East Malaysia routes, and also for travel within West Malaysia, would lift morale but would not have a significant impact on earnings as sales from domestic routes comprise only 22.5 percent of its total sales.

MAS last week announced it would axe 12 unprofitable international routes and increase flights in Asia following the terrorist attacks in the US last month.

It said the network restructuring would cut losses by up to RM190 million a year and that it expected to break even by 2004.

MAS said passenger volume was expected to fall around 15 percent from last year.

The airline embarked on a plan to return to the black after the government renationalised it in February. It has debts totalling more than RM10 billion.