Air New Zealand confirms talks with Virgin Blue

Talks to forge an alliance between Air New Zealand and rival Virgin Blue could see the airlines use each other's domestic networks, say analysts.

Air New Zealand yesterday said it had become aware of speculation it was in discussions about a transtasman alliance.

"Air New Zealand confirms that the airlines have been in ongoing discussions for several months but no agreement has been reached," the company said.

The company's shares closed steady yesterday at $1.37.

First NZ Capital analyst Jason Familton said an alliance could link into Virgin Blue's domestic network in Australia and Air New Zealand's domestic network here.

"If you look at both airlines' current routes and current exposure it's the bit that's missing from Air New Zealand.

"And though Virgin have got a little bit along the main trunk here in New Zealand, they don't have obviously to the regions and it's the bit missing from their network as well," Familton said.