The Government is to give Air New Zealand a $900 million lifeline, Finance Minister Grant Robertson announced on Friday.
The financial package is designed to secure essential routes and keep the airline operating, however there will still be job cuts at the national carrier as the COVID-19 pandemic continues to decimate the aviation industry.
The Government and Air NZ agreed a debt funding agreement through commercial 24-month loan facilities of up to $900 million.
"Without this intervention, New Zealand was at risk of not having a national airline," Robertson said in a statement.
"Air NZ has a unique and critical role in our economy and society. Also, the Government owns 52 percent of the company, which means we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier."
Dame Therese Walsh, chairman of Air NZ, said the company is "greatly appreciative" of the loan facility.
"The Government and Treasury moved swiftly to ensure that Air NZ had financial certainty as demand for flights domestically and internationally has rapidly fallen due to travel restrictions implemented by countries around the world," said Dame Therese in a statement.
"The loan facility ensures that Air NZ can continue to play a vital role in connecting New Zealanders and our businesses with each other here at home and around the world."
The airline has been under immense pressure since coronavirus started to take a hold around the world. Measures to curb the spread of the deadly virus have included the shutting of borders to non-nationals, which has hit airlines.
Aotearoa's border closed to anyone except citizens and residents on Thursday night.
Earlier this week, Air NZ announced it was suspending 85 percent of its international routes as well as making major reductions to flights across the Tasman to Australia.
On Thursday, the airline brought forward the closure of its London base due to the impact of the COVID-19 pandemic.
The base at Heathrow was meant to close in October when the airline had planned to cancel its daily flight between London and Auckland via Los Angeles, but due to the impact of coronavirus on air travel, the decision has been made to end the service this week.
"This agreement means that Air NZ is in a position to play its part in making sure Kiwis can return home from overseas and that essential flights and freight lines for goods like pharmaceuticals remain open by ensuring flights continue to and from key international destinations," Robertson said.
"The agreement also safeguards the domestic network, with flights assured to all current destinations.
"While today’s action means the company can continue to operate, given the unprecedented shock to the global aviation industry caused by COVID-19, Air NZ has advised that there will unfortunately be job losses as capacity is cut."
