Virgin Blue is working towards a deal that would see it add another codeshare and Velocity frequent flyer partner by the end of March, with others likely to follow later in the year.

The move, designed to further offset the advantage that Qantas enjoys through its international network and membership of the Oneworld Alliance, is part of Virgin's plan to reinvent itself as a "new world carrier" and attract more business travellers.

It is understood the airline is in talks with at least three airlines from the massive Star Alliance, whose members include Singapore Airlines and Air New Zealand, as well as three independent carriers.

The airline launched its Velocity frequent flyer program in November with Dubai-based Emirates and Virgin Atlantic as partners.

Virgin Blue chief executive Brett Godfrey confirmed on Friday that the airline was in talks with several airlines, including Star carriers.

However, he said the airline was not exploring the possibility of joining the alliance. "I think it's fair to say Oneworld carriers aren't going to be too interested, but Star carriers would rather put their people -- in terms of domestic distribution -- on anyone other than a Oneworld carrier," he said.

"So we're naturally interesting for them.

"The issue has always been the inadequacy of our system to talk to their systems, and we've started to overcome that."

Virgin is moving to distance itself from its low-cost carrier (LCC) beginnings and reinvent itself as a new type of carrier capable of offering the benefits of full-service airlines but with an LCC's lower cost base.

It is keen to attract more of the well-heeled travellers that allow Qantas to claim a 30-40 per cent yield advantage over its smaller competitor and give it more resilience during economic downturns.

Virgin is also believed to be looking at a premium economy-type service that would give business travellers increased leg-room on longer flights, and is set to introduce live cable television on all services.
Separately, the airline moved to refute union claims it underpaid staff.

In a letter to staff, Mr Godfrey said a decision to integrate its payroll system with Canadian software to remove the need for time sheets had resulted in a slight increase to pay totalling $300,000 to $400,000.

"The decision was taken to absorb the increase," he said. "The alternative was frankly more expensive and would have gone in to external pockets instead of the pockets of our people."

Mr Godfrey also denied that directors would seek a 33 per cent pay rise when they asked shareholders at tomorrow's annual meeting to increase the cap on the total pool they received from $750,000 to $1 million. He said the board had decided to increase the number of directors and no director had received a pay rise since the company was floated in 2003.

Commenting on media references to the $4.3 million remuneration package attributed to him in the company's 2004-05 annual report, he said this reflected 18 months of salary as well as "a guesstimate" of options not exercisable until the share price hits $3.

He said it was unlikely that the company's $1.70 share price would reach the required level any time soon. He pledged to pay any money realised from the options into a trust fund to help Virgin staff who hit financial difficulties.

"If it is of interest, my salary is $500,000 per annum and it has been since 2003, and that is all I've been paid," he said.