National carrier Malaysia Airlines is planning to launch a new operation from the northern tourist island of Penang to fly to domestic and regional holiday destinations.

"We have been talking about doing this in Penang, I would not deny it. And we are going through the process of getting the approvals and finalisation of the details," Malaysia Airlines managing director Idris Jala told reporters.

Asked if the carrier was planning to launch a new airline, he replied: "I suppose it would be that."

New Straits Times today reported that the operation would commence from April 1 using two Fokker 50s owned by the carrier's parent company, Penerbangan Malaysia Berhad.

It said Penang would serve as a hub for the airline to ply domestic routes in northern Malaysia as well regional holiday destinations such as Medan in Indonesia and Phuket in Thailand.

The new operation will complement the airline's existing service between Penang and Medan, and satisfy demand for northern domestic routes, sources told the newspaper.

"We do believe there is an opportunity for operating from a secondary hub, but provided the product must not be exactly the same," said Jala, who refused to reveal further details on the airline's plans.

Restructuring plan

The newspaper said the airline had already submitted a proposal for the new operation to the transport ministry and had redeployed F50 pilots from Malaysia's eastern states.

The carrier is in the midst of a major restructuring plan launched a year ago after it posted massive losses of RM1.3 billion for its 2005 financial year.

As part of the turnaround plan, the carrier has axed unprofitable routes, signed code-sharing agreements and surrendered all but 19 major domestic routes to budget carrier AirAsia.