The new partnership will strengthen Virgin Blue's position in the battle with rival Qantas to gain from the collapse of domestic airline Ansett, analysts say.

A government-backed attempt to put together a rescue for Ansett ended in failure earlier this month. The carrier's planes are now on the auction block for rivals to buy.

Flying higher

Ansett's bankruptcy made Virgin Blue the second biggest airline after international carrier Qantas.

Virgin Blue's new partner is Patrick, the cargo handler at Australian ports, which is eager to move into other transport businesses.

The budget airline will benefit from "new capital" for expansion using money paid by Patrick, the two firms said.

Flying further?

In the longer term, the agreement could allow Virgin Blue, "by being a truly Australian owned airline, to operate international routes in the future should it wish to do so".