Air New Zealand has signed a three year contract to maintain the fleet of cut-price rival Virgin Blue, the national carrier said on Thursday.

The work would be done by Air NZ's engineering services and would provide complete heavy maintenance support for the Australian-based airline's fleet of 48 Boeing 737 planes.

The engineering division already services Air NZ's Airbus A320 and Boeing 737 fleets, as well as planes flown by Freedom Air, Pacific Blue and Jetconnect.

Virgin Blue operates limited services between several major New Zealand cities as well as services to and from Australia, and within Australia.

Australian transport group Patrick Corporation holds 62.4 percent of Virgin Blue, with Richard Branson's Virgin Group holding 25.7 percent.