Malaysia Airlines to cut costs as oil prices bite

KUALA LUMPUR, Aug 5 (Reuters) - Malaysian Airline System (MASM.KL) said on Tuesday it was launching a "flexi employment programme" aimed at cutting costs at a time when the global airline industry is facing the pinch from soaring fuel prices.

The national flag carrier said in a statement that its employees would be given a choice of between a voluntary leave or a part-time programme.

"This is a win-win situation at a time when airlines around the world are retrenching employees to cope with the skyrocketing fuel price," it said.

"Although we want to reduce manpower in the short term to manage our costs as we are similarly affected by the fuel price, our approach is different as we will grow in the medium to long term."

The airline said that under its voluntary programme, employees will have the opportunity to explore new opportunities, while having the assurance of a job to return to.

It did not say how much money it hopes to save from the plan.

In June, the airline raised fuel surcharges on its international flights by up to 80 percent, and warned that fare increases around the world were needed to prevent an industry collapse.

Unlike many airlines around the world, state-controlled Malaysia Airlines has managed to stay in the black.

But it reported in May a 9.8 percent drop in first-quarter profit due to higher fuel costs.

It posted a profit of 120 million ringgit ($36.74 million) for the three months ended March 31, down from 133 million ringgit a year earlier.

The airline, which posted two years of losses since 2005, returned to full-year profit in 2007, aided by a business turnaround plan that has seen better yields and cost reduction. ($1=3.266 Malaysian ringgit) (Reporting by Faisal Aziz; Editing by Ben Tan)