No substance to Virgin Blue talk: Air New Zealand

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SYDNEY, Oct 12 (Reuters) - National carrier Air New Zealand on Friday dismissed speculation it was interested in buying a stake in Australian airline Virgin Blue Holdings Ltd .

''Air New Zealand has become aware of rumours to the effect that it is interested in acquiring a shareholdering in Virgin Blue Ltd. Air New Zealand advises that there is no substance to these rumours,'' the airline said in a statement.

Air New Zealand did not say where the speculation on Virgin Blue, which is 62 percent owned by Toll Holdings Ltd , had come from.

Analysts and local media have been speculating about a possible sale of Toll's stake in recent weeks. The Sydney Morning Herald reported last month that Singapore Airlines and Emirates [EMAIR.UL] had said they were not interested.

Australian logistics group Toll, which took control of Virgin Blue when it bought Patrick Corp in 2006, said in June it did not plan to sell the stake in the foreseeable future.

Air New Zealand is facing increased competition on its domestic routes from competitors Virgin Blue and Qantas Airways Ltd .

Pacific Blue, a subsidiary of Virgin Blue, said in August it would begin flying New Zealand's main domestic routes from November, and would offer a range of cut-price fares.

Air New Zealand responded by cutting its fares and reconfiguring its domestic services.

Australia's largest airline Qantas also said this week it was expanding its operations in New Zealand as competition for air travel on domestic routes in the country intensifies.

REUTERS DKS VP0725

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