WELLINGTON, New Zealand (AP) — National carrier Air New Zealand and Australian budget operator Virgin Blue announced an alliance yesterday, signalling an intensifying battle with Qantas for dominance of the region's market.

Air New Zealand shares traded flat at $0.9898 after the announcement, while Virgin Blue slipped 3.4 percent to $0.5319 before recovering slightly to be down 2.5 percent at $0.5365 by early afternoon.

The deal requires regulators' approval.