Malaysia's national flag carrier is about to become the only Asian airline with no debt.

The government in Kuala Lumpur has unveiled a restructuring plan that may see Malaysia Airlines (MAS) return to profit as early as 2003, after five years of losses.

MAS is currently 9bn ringgits (�1.5bn; $2.4bn) in debt.

The government plans to create a holding company that will take control of the airlines fleet of nearly 100 aircraft and assume its liabilities.

MAS will then become purely an international and cargo services operator, leasing planes from the holding company Penerbangan Malaysia (PMB).

And it will run domestic flights on behalf of PMB for a fee.

'Superior performer'

John Casey, who follows the transport industry for DBS Vickers Securities in Singapore, told the BBC's World Business Report he thought the plan would leave MAS in a good position.

"With a cleaner balance sheet and a more streamlined and focused set of operations I think that they could stand to be quite a superior performer over the next couple of years," he said.

Even before the plan is implemented Mr Casey said the financial position of MAS is improving.

He said the environment in Asia for air travel has improved dramatically recently and this has been reflected in MAS's results.

The airline reported a loss of 81m ringgit for April to June this year, compared with a loss of 321m ringgit for the same quarter last year.