Air New Zealand is dismissing as speculation a report it is looking to buy a cornerstone stake in Virgin Blue.
Regulators in Australia and New Zealand are mulling over a proposed alliance between the airlines, which, if approved, will allow them to collaborate on routes and sell seats on each other's flights.
The Sydney Morning Herald is reporting sources as saying Air New Zealand has won indicative support from regulators and is looking to buy a stake of up to 15% in Virgin Blue to cement the relationship.
But Air New Zealand insists it hasn't bought any shares, and says any such purchase would require approval from Australia's Foreign Investment Review Board.
The airline says it has had no indication of regulators' decisions, and isn't expecting a final decision until the end of the year.