National carrier Malaysia Airlines will acquire 10 turbo-propeller planes from European aircraft maker ATR for RM638.3 million (US$183 million) as part of expansion plans for its new budget carrier.

MAS has also an option to buy an additional 10 ATR aircraft later on.

The ATR-72 500s aircraft - to be delivered from 2008 - will be used by low-cost operator Firefly, a wholly-owned unit of MAS.

"The aircraft are for the expansion of Firefly ... The ATR aircraft will progressively replace the current Fokker 50 aircraft fleet of Firefly," MAS said in a statement.

The preliminary agreement was signed Monday between MAS and ATR in Italy, in the presence of Malaysian Prime Minister Abdullah Ahmad Badawi and his Italian counterpart Romano Prodi.

Abdullah was in Italy to boost economic and political ties. He visited Russia and Bosnia Herzegovina earlier.

Firefly, which currently flies out from northern Penang island, plans to establish hubs in Subang in central Selangor state, Johor Baru city in the south and Kota Kinabalu in eastern Sabah state on Borneo island.