Malaysia Airlines (MAS) will be launching a new regional premium carrier by the second half of 2012.
The short-haul carrier, yet to be named, will focus on key business routes within four hours of Kuala Lumpur, said the airline at a press conference to unveil its revamped business plan on 7 December.
This means that the new carrier will connect Malaysia to key cities in South Asia and Greater China.
The long term plan however, is for it to fly all domestic and regional routes currently serviced by MAS.
The carrier will operate a fleet of new Boeing 737-800s.
MAS added that the segmentation will allow the premium carrier to focus on "feeding" passengers to the parent airline, allowing MAS to focus exclusively on serving long-haul passengers.
This annoucement comes together with a slew of cost-cutting measures the airline will be taking in an attempt to bring it back to profitability by 2013.
The airline has reported a nine month cumulative loss of Malaysian dollar (M$)1.247 billion ($397.5 million) for the first three quarters of 2011, and has said that it will go bankrupt by 2012 if it continues with its current business plan.
Last month, AirAsia CEO Tony Fernandes had also said that he plans to start a new all-premium regional carrier based in Kuala Lumpur in collaboration with MAS.