WestJet Airlines Ltd has entered into a partnership agreement with Delta Air Lines Inc as the Canadian carrier seeks expansion avenues in the large U.S. market.

WestJet, Canada's second-biggest airline, said Monday it has signed an interline agreement with Delta, the second-largest carrier in the United States, that will allow customers of both airlines to purchase connecting flights on one ticket.

The agreement, which is the latest of several such deals for WestJet, helps the carrier in its quest for new sources of revenue and profit, while trying to attract lucrative business passengers.

WestJet's shares were 20 Canadian cents, or 1.5 percent, higher at C$13.40 on the Toronto Stock Exchange on Monday morning.

"In the long term this is a good growth opportunity. In the short term it will generate some traffic," said Canaccord Genuity airlines analyst David Tyerman.

"But to me the big prize (for WestJet) is flying into the huge number of cities that they are not flying into that are more business orientated... like Chicago," he said.

Calgary-based WestJet, which began operating in 1996 as a low-cost carrier, is slowly adding services to attract nonbudget passengers. It flies throughout Canada and to the Caribbean and Mexico. In the United States it flies mostly to sun vacation destinations.

It has made partnership agreements a central plank of its expansion strategy.

The Delta deal is its second interline agreement in the United States in the past four months after it partnered with American Airlines in October.

WestJet also has interline deals with British Airways Plc and Air France-KLM. In October, it struck its first code-share arrangement with Cathay Pacific Airways .

Interline deals are often precursors to code-share deals, in which carriers sell tickets on each other's airline. These pacts boost revenue because airlines can offer more destinations, while keeping a lid on costs, as they don't need to service all the planes themselves.

The agreement with Delta, effective immediately, allows customers to receive boarding passes for all segments of their trips at their first check-in and to tag bags through to their final destination.

Passengers now can connect between WestJet and Delta flights at more than 25 gateways in Canada and the United States, the airlines said in a statement. Seats are on sale immediately via most Delta ticketing channels.

($1=$0.99 Canadian) (Additional reporting by Bhaswati Mukhopadhyay in Bangalore; editing by Peter Galloway)