Air New Zealand's chief executive says its third-party contract with the Saudi military was an error of judgement and he only found out about it 10 days ago.
The airline is now reviewing how it ended up servicing engines being used by the military despite its role in Yemen's humanitarian crisis, chief executive Greg Foran says.
According to the UN, Yemen is "one step away from famine" with the Saudi Navy blocking necessary supplies such as food, water, and medical supplies since 2015.
Foran told The AM Show the contract was immediately shut down when he found out about it.
"It is being suggested that, somehow, this is some sort of secret deal. I can assure you that that's not the case - it is a case of poor judgement.
"I did actually find out about this 10 days ago and took immediate action."
Reports of the contract work sparked fears New Zealand's reputation as a global force for peace was in tatters. Green Party Human Rights spokesperson Golriz Ghahraman said on Sunday the ramifications could be devastating.
"It's not a question of whether Air New Zealand was involved in something immoral or unethical or even near-human right breaches - we're talking about atrocity crimes," she told Newshub. "The United Nations is talking about one of the worst atrocities in human history."
Foran said he found out about the contract after being informed by the Treasury.
"This was a $3 million contract; it was for two engines in a powerplant generated through a third-party supplier. Because of the amount, it didn't raise itself up to executive levels or any higher, and I think it's poor judgement on our case that we've gone ahead and done that.
"That's something that we'll go ahead and review and sort out."
Ghahraman described the misstep by Air New Zealand as "horrific".
"New Zealanders will be heartbroken to find out national carrier may have been involved in this way."
Foran said he would reach out to Ghahraman later on Tuesday to discuss the matter.
"That's something that I'm very happy to discuss with Golriz and I'll be reaching out to her later on today to make sure we have a very open and frank conversation about what's going on."
Finance Minister Grant Robertson said he was "surprised and alarmed" to hear that a branch of the airline had been working with the Saudi Navy, adding the situation was not acceptable.
Foran, meanwhile, assured that Air New Zealand was reviewing its reporting systems.
"We'll conduct that review and make sure we have the right sign-off procedures in place.
"I will make sure that I get involved and across that - we'll certainly be going back and reviewing what has occurred, and anything that is possibly coming down the pipeline, to make sure that we get these things right."
