KIWI Regional Airlines is set to wind up its operations - bringing an end to its flights between Tauranga, Nelson and Dunedin next month.

Kiwi Regional Airlines chief executive Ewan Wilson told the Bay of Plenty Times Weekend last night that at Tuesday's shareholders meeting it was agreed to accept an offer from Air Chathams to buy Kiwi's 34-seat Saab 340A, and absorb most of the airline's fulltime staff from August 1.

Mr Wilson, who is also a minor shareholder of Kiwi Air, said he had put the major shareholders under some pressure to agree to buy a second aircraft and get it operating before summer.

"That meant a considerable financial investment and at the end of the day they did not have the appetite to do it," he said.

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Back in March, Mr Wilson announced plans to raise up to $2 million to add a Saab 340 QC to its fleet. With only one plane flying Kiwi's regional routes, when there was a mechanical problem ground staff were "hammered" by upset passengers, he said.

Mr Wilson said Kiwi Regional Airlines also faced fierce pricing competition from other airlines, and the shareholders had to make a choice.

"Either expand by adding a second aircraft to our own fleet, guaranteeing reliability of service, and splitting the very high compliance costs, or being absorbed into a larger player."

Mr Wilson said this sale offered the shareholders the opportunity to protect the majority of Kiwi staff's jobs and also get a return on their investment.

Apart from 10 part-time staff working 5-8 hours a week in Hamilton, Nelson and Dunedin all Kiwi's pilots, cabin crew and engineers have been offered full-time jobs with Air Chathams.

"It gives me a sense of pride to know that our aircraft and the majority of our staff which we have helped train are staying in this country.

"We have a had a formal maintenance agreement with Air Chathams since the start and this will be an extension of that relationship."

Mr Wilson had not been offered a role on Air Chathams management team. He said he would stay on as CEO until the transition process was completed, and finish up in September.

"I have no current plans other than taking a holiday with my wife," he said.

Mr Wilson said he wanted to make it clear that the sale to Air Chathams was "not a collapse".

"This is also not an airline going into liquidation. I wish to make the point that when the airline's operation is wound up and absorbed there will be no creditors or passengers left out of pocket."

Passengers who made bookings to fly after July 30 would receive full refunds, but all Kiwi Regional Airlines' charter flights for school groups in August and September would go ahead.

It would be business as usual until July 30, then Kiwi Regional Airlines would run Air Chathams' Whanganui to Auckland service until the transfer of Kiwi's air operating certificate.

In a written statement Air Chathams CEO Craig Emery said: "We are delighted to have bought Kiwi Regional Airlines' Saab 340."

Mr Emery said it was a respected aircraft type in New Zealand and had been well maintained.

"Kiwi's pilots and engineers will make a welcome addition to the Air Chathams family."