Australia's struggling Qantas Airways confirmed yesterday that it is in talks with Dubai's Emirates about a potential alliance, as Gulf carriers race to expand their passenger base.

The Australian Financial Review reported earlier that Qantas was in talks with Emirates on a deal to help its loss-making international division by giving the carrier access to greater numbers of passengers from Emirates' hub in the Middle East.

A final form of any deal could vary from a straightforward code-share arrangement - where airlines share some flights - to a more global revenue-sharing deal, the report said, citing unidentified sources.

Qantas confirmed talks with "Emirates, among others" while the Dubai government-owned carrier declined to comment.

Gulf-based industry sources said the talks were limited to code-share agreement and that an equity stake in Qantas or any capital injection by Emirates was not on the agenda.

Emirates has long said that it would not take equity positions in other airlines but was open to code-sharing agreements that could see passengers ferried through Dubai. The airline's president said in June that it may discuss a code-sharing agreement with Qantas. With a focus on organic growth, Emirates risks being outpaced by its main state-backed Abu Dhabi rivals Etihad Airways and Qatar Airways, both of which are making moves on the Australian market.

Etihad doubled its stake in Qantas rival Virgin Australia to 10 per cent last month and Qatar Airways launched its first service to Perth this month, saying that it also wanted to partner with Australian carriers. In a separate report by Malaysian business weekly The Edge, an executive at Malaysian Airline System Bhd (MAS) was quoted as saying that the company may revisit a joint venture plan with Qantas after the Malaysian carrier becomes an official member of the Oneworld Alliance in 2013.