The Government has thrown more support behind Air New Zealand.
A statement from Finance Minister Grant Robertson on Friday morning confirmed the Government is extending its loan facility agreement to the airline by $600 million, taking it to a maximum of $1.5 billion.
The interest rate on the loan has also been lowered.
Robertson said the amendment to the loan allows Air NZ to benefit from the increased activity as borders re-open and travel and trade movements increase. Earlier this week, it was announced a two-way quarantine-free Aotearoa-Australia travel bubble will open on April 19.
Air NZ has also announced it is defering its planned capital raise to later in 2021, to allow more time to assess the impacts of recent developments on its path to recovery.
The airline's chairman Dame Therese Walsh said the company had "seen some clearing of COVID-19 clouds recently", such as the announcement of the travel bubble and the vaccine rollout plan.
"There's a huge amount of optimism in the airline as we look forward to trans-Tasman travel starting. After a few months of operating internationally again we expect to have a clearer view of the recovery path for the airline and the long-term capital structure to suit our future business," Dame Therese said.
The adjustment to the agreement "brings the interest repayments more into line with market conditions.
The interest rates applied to Air NZ's initial COVID-19 loan of up to $900 varied between 7 and 9 percent. Under the new extension, the interest rates will vary between 3.8 percent and 5.3 percent.