Royal Brunei Airlines, which is scaling back its long-haul operation, does not need all the long-haul aircraft it has in its fleet and is in talks with lessor Singapore Airlines (SIA) about returning some of the aircraft early.

Royal Brunei last year took six Boeing 777-200ERs from SIA, but in June announced a massive restructuring that involved dramatically scaling back its long-haul operation. The money-losing carrier intends to focus more on short-haul flights connecting Brunei to nearby Asian countries using Airbus A320-family aircraft.

As a result of the strategy change, on Oct. 30 the airline dropped Auckland, New Zealand, and Brisbane and Perth, Australia, from its route network.

Royal Brunei is in talks with SIA, the airline’s deputy chairman, Dermot Mannion, told Aviation Week on the sidelines of the Association of Asia Pacific Airlines annual general meeting in Seoul, but he declined to say how many aircraft Royal Brunei wishes to return.

The 777-200ERs were a temporary solution for Royal Brunei until the five Boeing 787-8s it has on order were delivered. ”In the next week or two, we hope to have specific delivery dates” for the 787s ready to announce, says Mannion.

The 787-8s will be used for its remaining long-haul services to Melbourne, London Heathrow, Dubai and Jeddah, Saudi Arabia, and Mannion says it has no plans to drop these destinations. As for the suspension of other long-haul destinations, he says, “Sometimes you’ve got to take one step back, to take two steps forward.”

According to Mannion, Royal Brunei plans to boost frequency on its existing short-haul routes and develop new short-haul routes. It does not plan to add smaller aircraft, such as turboprops, to its fleet because it wants to cut costs by only having two aircraft types—the A320 family and 787s, he says.

The carrier currently has two A319s and two A320s in service, in addition to the six 777-200ERs, and has five Rolls-powered Boeing 787-8s on order, according to the Aviation Week Intelligence Network database. Mannion says Royal Brunei is getting another A320 in March on lease from CIT.

When asked if it will be hard for Royal Brunei to compete in short-haul markets given that there already are low-cost carriers flying to many of these destinations, Mannion says, “We’ve never been afraid of competition from low-cost carriers.” There is demand for full-service carriers and “if we can deliver the right level of customer service, at the right price,” Royal Brunei will succeed.

One of the issues Royal Brunei has to contend with is that it is government owned, and the government wants the airline to create jobs. As a consequence, the airline has too many employees for the number of aircraft it operates, say industry executives familiar with Royal Brunei’s operations.

Mannion says the airline has 1,900 employees. When asked about future job cuts, Mannion says, “That’s a sensitive issue. We’re looking at the employment issue and hope to come out with an announcement in due course.”