Mr English said New Zealanders would be at the front of the queue for shares and it was confident in achieving the Government's objective of at least 85 per cent New Zealand ownership.
"Air New Zealand is different from the other companies in the Government share offers programme in that it is already listed on the New Zealand and Australian sharemarkets.
"This means a different process will be used to reduce the Government's shareholding.''
Mr English said Treasury had sought proposals from its panel of financial advisers to carry out an off-market sell-down via a bookbuild.
Craigs Investment Partners, together with Deutsche Bank and Goldman Sachs, had been appointed to undertake the transaction and work with New Zealand sharebrokers in particular to target widespread New Zealand ownership.
Shares will be sold via a competitive bookbuild process to New Zealand sharebrokers for on-sale to New Zealanders, and to New Zealand and some overseas institutional investors,'' Mr English said.
"Shareholding sell-downs of this type are typically conducted off-market when the company's shares are not trading on a stock exchange, to ensure the company's share price is not affected by speculative trading.''
Mr English said an off-market sell down was fast and efficient, which was important when working with a company that was already listed.
"Usually these types of sales are completed in less than one day. However, to target widespread New Zealand ownership, we are conducting the bookbuild over Monday and Tuesday to give New Zealand sharebrokers time to discuss the offer with retail investors.
"That is why the sell-down process is being started today and we anticipate there will be a trading halt of Air New Zealand shares on the NZX and ASX when the markets open tomorrow.
"We expect Air New Zealand's shares to resume trading on the NZX and ASX on Wednesday.''
Mr Ryall said the airline was currently trading at five-year highs, making it an opportune time to conduct the sell-down.
"Air New Zealand is one of our most iconic global brands and has regularly been recognised on the world stage as a leading international airline. Its share price has been performing strongly.
"New Zealanders interested in purchasing Air New Zealand shares should talk to a sharebroker or authorised financial adviser.''
Mr Ryall said there had been several successful off-market sell-downs in recent times, involving other existing NZX listed companies such as Auckland Airport, Trade Me, Summerset and Sky TV.
"This sale approach will keep down transaction costs for taxpayers, maximising the proceeds that we can invest in other public assets like hospitals and schools.
"The Government's share offer programme has raised $3.6 billion from the first two share offers. The proceeds of the programme have been allocated to the Future Investment Fund so the money can be reinvested in new assets and new infrastructure without the need to borrow money from overseas lenders.''
In a statement, Air New Zealand said it had noted the Government's announcement it would sell part of its shareholding in the company.
"As has been indicated in recent months Air New Zealand considers it a matter solely for the Government and will not be making further comment.
"Air New Zealand has decided to make a request to the NZX and ASX for trading in its shares to be halted until the Government's sale is completed and an announcement regarding the outcome can be made.''
The Green Party said the sale would result in private investors taking a major share in the national carrier before New Zealanders got the chance to have their say in the referendum on asset sales.
Voting begins on Friday.
"Private ownership of our national airline has historically been very bad for New Zealand taxpayers and businesses and poses real risks for Air New Zealand's iconic brand,'' party co-leader Dr Russel Norman said.
"Private investors nearly bankrupted Air New Zealand in the early 2000s and taxpayers had to resuscitate this critical public asset. Private investors will take a big share in the airline again and will seek bigger profits from it.''
The Government's ``risky'' sale would force the company to prioritise private shareholders' profits rather than act in the national interest, Dr Norman said.
"National is foolishly flooding the market with shares for foreign buyers in order to avoid the asset sales referendum where New Zealanders will have the chance to vote no to further sales.''
