AIR New Zealand has been offered a NZ$900 million (RM2.3 billion) loan to help it survive the coronavirus crisis, said the government today.

“Without this intervention, New Zealand was at risk of not having a national airline,” said Finance Minister Grant Robertson.

Air New Zealand shares, which had been on a four-day trading halt, slumped as much as 45.45% before recovering slightly to be down 32.47% at NZ$1.04 at mid-afternoon.

The airline has been hit hard by the crisis, as the government has sealed off borders to non-residents and advised against all overseas travel.

Even before the unprecedented measures, the airline had cut long-haul flights by 80% and warned that a third of its 12,500 workforce could lose their jobs.

Robertson said Air New Zealand plays a critical role in the remote South Pacific nation, and that it is vital to retain flights to key international destinations throughout the Covid-19 pandemic.

“This agreement means that Air New Zealand 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.”

Under the deal, the government – which owns 52% of the flag carrier – will extend up to NZ$900 million in credit to the airline over the next two years.

In return, the airline has agreed to cancel its interim dividend to shareholders and not pay dividends for the next two years.

Chief executive Greg Foran said Air New Zealand will continue, but it will inevitably be smaller.

“Not all airlines will survive… we are going to get through this, I am confident of that,” he told reporters.

He said NZ$900 million is the amount the airline asked for, and declined to speculate about further government aid or even a complete renationalisation of the company.

The credit facility is separate from a NZ$600 million aviation industry support package announced on Tuesday as part of a NZ$12.1 billion economic stimulus package.

Air New Zealand chair Therese Walsh said it appreciates the government’s support.

“The government and Treasury moved swiftly to ensure that Air New Zealand has financial certainty as demand for flights domestically and internationally rapidly falls due to travel restrictions.”

New Zealand has 39 confirmed cases of the coronavirus, but no fatalities so far and no evidence of community transmission. – AFP, March 20, 2020.