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Malaysia Airlines Presents Radical Rescue Plan


Malaysia's loss-making national airline has presented a radical rescue plan, while China is expanding its airport infrastructure to accommodate an anticipated growth in passenger numbers.

Malaysia Airlines has presented a radical rescue plan after reporting a loss of more than $160 million for the three months ending in December. This was the airline's third quarterly loss in a row.

The airline blames higher fuel and staff costs and falling passenger numbers for the crisis.

The airline's turnaround plan includes an increase in fares, the closing of unprofitable routes, a 20-percent budget cut, and a freeze on recruitment.

The state-run airline hopes these measures will help it become profitable again by next year. Song Eu Jin, analyst at ECM Libra investment bank in Malaysia's capital, Kuala Lumpur, believes the chances for a turnaround are good.

"I do think it's a very well-structured plan and it will ultimately get them back on the right track. However, as with most things, I think execution is key," said Song. "The plan looks great but the question is whether the management would be able to execute on the plan - which I believe they would."

China, meanwhile, has more air passengers than it can handle. Chinese airlines have gone on a buying spree for new planes to meet a forecast of 14-percent annual growth in domestic air traffic.

The government says it will spend more than $17 billion over the next five years to expand its airport infrastructure. The plans call for building 44 new airports and expanding the existing ones, especially in major cities like Beijing, Shanghai and Guangzhou.

U.S. chip-making giant Intel announced plans to build a $300 million chip assembly and testing facility in Southern Vietnam. The facility will be built in the Saigon Hi-Tech Park outside Ho Chi Minh City, and will be the largest investment in Vietnam by a U.S. company.

Intel officials said construction of the plant, which will employ 1,200 people, will begin immediately. Production is expected to begin in the second half of 2007.

And in news from the Philippines, Philippine Long Distance Telephone, the country's biggest phone company, reported a record net income of more than $650 million for 2005, an increase of 22 percent compared to a year earlier.

The results were boosted by one-off gains and lower expenses that offset sharply lower growth in mobile phone subscribers.

PLDT predicts 2006 will be a year of consolidation, as the company will spend more to expand new services and revenue growth from its key mobile phone division is expected to cool further.

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