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.