The Government will retain its majority stake in Air New Zealand by participating in a capital raise this year, Finance Minister Grant Robertson says.
But Cabinet must be satisfied with the terms of the airline's proposed equity raise - to be completed by June 30 - in order to maintain its stake.
At present, the Government owns 52 per cent of the airline and has made available a $900 million loan that could be converted to equity. The airline is burning through between $65 million and $85 million in cash a month and has said it wants to minimise its reliance on the taxpayer loan - with interest rates of up to 9 per cent - by going to the market to raise capital.
By the end of last September, the airline had drawn down $110 million of the Government loan, a figure that will be updated when the company reports its half-year result at the end of the month.
Other airlines have successfully raised funds in the past 10 months to help them survive the Covid-19 crisis.
In a statement, the airline says a letter from Robertson recognised the importance of a strong domestic air travel network for economic and social development purposes. It also recognised the key role of Air New Zealand in supporting our international tourism and export industries.
"The minister also highlighted Air New Zealand's commitment to environmental sustainability, and the airline's role as a good employer," the airline says.
Airline chairman Dame Therese Walsh said she was delighted with the confirmation of support from the Crown and the continued positive engagement.
"We are grateful for the loan arranged with the Crown in May last year, but that was always a temporary measure. The ability to raise equity will help set the airline up for recovery from the impacts of Covid-19 and to continue to fulfil its purpose of connecting New Zealanders to each other and New Zealand to the world."
An NZX announcement says: "Given the critical role the company has in New Zealand's economy and society, the Crown has, in that context, confirmed in a letter to the Air New Zealand chairman its longstanding commitment to maintaining a majority shareholding in Air New Zealand."
In 2001 the Government spent $885m bailing out the airline after a disastrous foray into Australia and the impact of the 9/11 terror attacks.