Shares in Virgin Blue soared more than 4 percent, or 2.5 cents, to 60.5 cents on Wednesday as the company confirmed talks with New Zealand national carrier Air New Zealand for a possible trans-Tasmanian alliance.

The move came seven years after a similar alliance talks between Kiwi airline and Qantas bogged down.

Virgin and Air NZ issued a brief statement to the Australian Stock Exchange to confirm they have been engaged in discussions for several months. The talks are focused on ''commercial co-operation on trans-Tasman markets."

''Air NZ confirms that the airlines have been in ongoing discussions for several months but no agreement has been reached,'' it said in a three-paragraph statement to the ASX. No further details were provided by both carriers.

Air New Zealand said it would issue comment once a final agreement has been reached.

Talks between the two carriers came after the Australian Competition and Consumer (ACCC) Commission prevented a planned merger between Qantas and Air New Zealand on the trans-Tasmanian route in 2003.

The ACCC opposed the alliance citing competition grounds.