If the government decides to offload some or all of its 69 per cent stake in the national carrier, it could be offered to a strategic partner or to the market, said Chief Executive Idris Jala.

'I certainly believe that the government is very keen (to sell a stake). It'll do it for the right price at the right time,' Idris told reporters on the sideline of a regional aviation conference here.

At the same time, he said the flag carrier is exploring the possibility of acquiring stakes in other airlines although this is still in the early stage.

He said passenger demand is expected to fall short of the industry's total capacity over the next five years, which will hurt airlines' profitability and push the formation of new alliances.

'We are looking at opportunities in Asia-Pacific region,' Mr Idris said.

'I believe mergers and acquisitions are very efficient. It will reduce costs and we will be able to offer lower fares.'

Last month, the carrier unveiled a five-year growth plan which calls for opening up more routes in Southeast Asia, China and India, fleet expansion and lower fares to boost its annual profit to as much as 3 billion ringgit (S$1.3 billion) by 2012.

Idris said the airline also aims to save as much as 1 billion ringgit this year through cost-cutting in procurement, maintenance and other related services.

'Our operations costs are up because of fuel prices and also wages are going up, we want to take out bad costs,' he said.

The carrier rebounded from deep losses in 2005 and 2006 with a record profit of 610 million ringgit in the nine months to September 2007 following a successful revamp.

On fleet expansion, Idris said the carrier will likely decide by April whether to proceed with its order for six superjumbo A380s following a delay in delivery due to production problems.

'I'm happy about the latest development with Airbus. We are reaching a win-win situation,' he said.

Last month, company officials have indicated the airline may stick to its plan to acquire up to 110 new planes, with a final decision to be made after the current quarter. -- AP