Beleaguered national carrier Malaysia Airlines today announced that it would cut costs in an ambitious attempt to bolster profits.

Managing director Idris Jala said operating costs would be cut by up to RM1 billion over the next few years.

Idris revealed the plan after Malaysia last week said that budget carrier AirAsia had won its long battle to fly the lucrative Singapore-Kuala Lumpur route, breaking a 35-year stranglehold held by the two national airlines.

Idris said the one billion ringgit cost cut will comprise 10 percent of the operating cost of the airline.

"We want to transform Malaysia Airlines into a five-star airline but operating at a low cost carrier cost," he told reporters.

RM4 bil turnaround plan

Malaysia Airlines launched a four billion ringgit turnaround plan in March last year after it posted a RM1.3 billion annual loss for 2005.

"We are on schedule, we are strongly aspiring to achieve record profits this year," he said. The carrier posted a net loss of RM136 million for 2006.

The company hopes to turn a profit in 2007 and then post record earnings of RM500 million in 2008.

Idris also said Malaysia Airlines will cut fares up to seven percent both for domestic and international flights over the next few years.