(AFP) Loss-making national carrier Malaysia Airlines may be forced to lay off staff to cut costs, a report said today.

Transport Minister Dr Ling Liong Sik said the possibility of lay offs was heightened by the Sept 11 terrorist attacks on the United States.

"The attacks may heighten the possibility (of retrenchment)," he was quoted as saying by the Sunday Star newspaper.

MAS recorded a loss of RM1.33 billion in the year to March - more than five times its loss of RM258.57 million in the previous year.

The airline has now reported losses for four straight years and has borrowings totalling RM10.34 billion.

Fare hike

Ling said if insurance companies decided to raise their charge, MAS would have to increase fares.

Insurance giants, facing a multi-billion-dollar bill from the hijacked aircraft assaults on New York and Washington, warned airlines they would have to radically slash third-party risk cover.

Two of the airliners hit the World Trade Center in New York, a third crashed into the Pentagon in Washington and a fourth went down in an empty field in western Pennsylvania.