Government takes control of Air New Zealand

9.00 am

The New Zealand Government will take an 83 per cent stake in financially troubled Air New Zealand.

Finance Minister Michael Cullen has announced the Government will invest $885 million in two stages.

There will be an initial loan of $300 million that will later be converted to shares at 24 cents a share.

A second payment of $585 million will be made at a share price to be determined later.

"We have had to wait a frustratingly long time to reach this stage," Dr Cullen said. "I hope events will now be able to move much more swiftly."

The package was drawn up after agreement was reached with the Voluntary Administrators of Ansett on Wednesday to settle amounts due under a letter of comfort provided to Ansett by the Air New Zealand Board.

As part of the bailout package, Air New Zealand will pay its former subsidiary Ansett Australia $A150 million($184.2 million) in settlement of its claims.

"The effect of the Ansett deal was to give us a much, much clearer picture of Air New Zealand's potential liabilities and therefore a much firmer basis on which to develop a recapitalisation strategy," Dr Cullen said.

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