Loss-making Malaysia Airlines is hopeful of returning to the black in 2007 with a bigger-than-expected profit after embarking on a major restructuring plan, a top executive said today.

Managing director Idris Jala said at a regional aviation conference that a three-year turnaround plan, unveiled in March, was already yielding results.

The flag carrier had projected in September a net profit of RM50 million for the fiscal year to December 2007.

"We are now in the midst of finalising our budget plan for the new year. If anything, it's going to be an upward revision," Idris said on the sidelines of the Aviation Outlook Summit organised by the Sydney-based Centre for Asia Pacific Aviation consultancy.

Returning the airline to profitability and improving its cash flow is the number one priority before the Malaysian flag carrier can even contemplate new ideas to grow its business, said Idris.

"Our view in turning around the company is that you must fix your cash problem, you must fix your profit problem before beginning to think avant-garde ideas about growth," he said.

"We really have to be focused and not be distracted from trying to fix our problems."

Staff retrenchment

In August, Malaysia Airlines announced a net loss of RM498.2 million in the first half to June, compared to a loss of RM166.2 million in the same period a year ago.

For the whole of the last financial year, the airline recorded losses of RM1.0 billion.

The national carrier is attempting to restructure operations. Under the turnaround plan it surrendered all but 19 major domestic routes to budget carrier AirAsia and cut out unprofitable international routes.

It is also spending up to RM850 million to lay off 3,000 to 5,000 employees in a voluntary separation scheme.