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Written by: Staff

KUALA LUMPUR, Mar 28 (Reuters) Malaysia's state-controlled flag carrier, Malaysian Airline System Bhd aims to shed almost a third of its workforce under plans to cut unprofitable routes and return to the black.

Under a shake-up of domestic routes, the government announced last night that Malaysia Airlines would operate just 19 domestic trunk routes with 96 others being handed over to the country's low-cost carrier, AirAsia Bhd.

The rationalisation of domestic routes would require the loss of around 6,500 jobs from Malaysia Airlines' workforce of 23,000 and a reduction in its fleet to 21 from 40, the airline said.

''The news on shedding jobs and reducing aircraft is positive for MAS,'' Ngu Chie Kieng, head of research at local brokerage TA Securities, said today.

''It is moving in the right direction. But profitability will only come in a few years, so there's no urgency to jump into the stock right now.'' Malaysia Airlines shares closed unchanged on Monday at 2.88 ringgit. The firm is due to hold a joint news conference with AirAsia later today to give more details on the plans.

Malaysia Airlines is trying to overcome a crisis brought about by stiff competition, lower fares, rising fuel prices and its traditional role as a full-service carrier with a big and increasingly unprofitable route network.

Last month, it reported widening losses and said it would raise a $1.1 billion cash-lifeline and increase local fares for the first time in 13 years to return to profitability next year.

Reuters PDS VP0638

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