Malaysia Airlines plans to transform itself into a five-star airline with budget carrier fares, under a five-year business transformation plan to be launched in 2008, a report said Monday.

The beleaguered flag carrier last year launched a turnaround plan aimed at restoring it to profitability after a series of losses.

Its managing director, Idris Jala, said the airline now wanted to shift gears again, with a five-year transformation plan aimed at making it more nimble to face heightened competition.

"We were talking a lot about business turnaround plan before. Now we plan to transform from what we are today into a five-star airline at low-cost carrier cost," he told the state news agency Bernama.

Toyota an example

Idris said companies like Japanese auto giant Toyota had successfully maintained quality standards while reducing costs.

"We will not behave like a low-cost carrier. We will always provide superior products and services to customers but we will drive down our cost so that we will then be able to offer highly-competitive rates to passengers," he said.

Malaysia Airlines was stung last week when the government allowed pioneering budget carrier AirAsia to operate on the lucrative Singapore-Kuala Lumpur route, breaking a 35-year stranglehold by the two nations' flag carriers.