Air New Zealand has withdrawn its application for a court hearing over Christchurch International Airport's planned $208 million terminal development.
The judicial review was due to start next week, although Air NZ said last month it was hoping for an out-of-court resolution after talks with the airport company.
Air NZ had said it had wanted the terminal project at a cost that was acceptable to the airline.
Both parties had considered the judicial review to be a last resort.
"We've worked hard to address various concerns about the project and will continue to work closely together to ensure the project is a success," outgoing airport chief executive Rene Bakx said.
The project costs were expected to remain about the same, he said.
The problem had been a number of small elements in the design, such as passenger flows and how passengers were to be processed.
Some final details of the terminal development project had yet to be decided, he said.
The airport company expected to award a contract in the next month or so, and wanted to start the project as quickly as possible ahead of the 2011 Rugby World Cup.
Christchurch Airport is also looking for a new chief executive after Bakx's sudden resignation last month.
He took on the role three years ago and no reason for the resignation was given by the company.