NOT long ago, Malaysia Airlines was on life support, forced to sell off its headquarters and fired thousands of staff to avoid bankruptcy, but analysts are now bullish about its prospects.

The Malaysian flag carrier sank to its lowest ebb in 2005, when it racked up losses of RM1.3 billion over nine months.

The dismal performance forced the introduction of sweeping reforms, which saw the airline slash staff and unprofitable routes, and sell non-core assets.

Malaysia Airlines finally swung into the black in 2007.

Despite the global financial crisis that then hit, grounding many weak airlines, analysts are upbeat on the Malaysian carrier's fortunes, especially after it posted net profits of RM490 million (S$203.9 million) last year.

"We are optimistic," said Mr Hafriz Hezry Harihodin, an aviation analyst from AmResearch, adding that an extensive fleet renewal was expected to have a positive impact on yields from next year.

The turnaround plan has been a success, especially in terms of bringing down unit costs, improving efficiency and strengthening balance sheets, he said.

Under the revamp, the airline launched low-fare campaigns to fill up seats, imposed a recruitment freeze and embarked on efforts to boost passenger loads and expand its network more strategically.

It has ordered 35 medium range B737-800s, with the first to be delivered this year, as well as six Airbus A380s and 25 fuel efficient A330-300s, giving Malaysia Airlines one of the youngest fleets in Asia.

It expects to make annual savings of RM300 million after receiving the first 15 A330-300s wide-body aircraft, which are scheduled for delivery between next year and 2016.

"They will save quite a lot of money because they are low maintenance and have a low fuel-consumption level," said Ms Angeline Chin, an aviation analyst from TA Securities.

She added: "We believe that Malaysia Airlines has already reached its trough and is on its recovery path, despite the flat yield growth."

Other analysts, however, warned there was still a risk of more hiccups in the carrier's journey to financial health.