The New Zealand government has gained $NZ365 million ($324 million) from selling a 20 per cent stake in Air New Zealand, taking the total raised from its asset sales program to almost $NZ4 billion.
In the third of four planned asset sales, 221 million shares in the flag carrier were sold to mostly New Zealand investors for $NZ1.65 a piece - the price at which the stock closed before the sale process.
The sell down reduces the government's stake in Air New Zealand from 73 per cent to 53 per cent, and follows partial sales of stakes in utility assets Meridian Energy and Mighty River Power.
Of the Air New Zealand shares sold by the government, 43 per cent were picked up by NZ institutional investors, 41 per cent by local retail investors, and the rest by overseas institutions.
NZ Finance Minister Bill English emphasised that about 88 per cent of the airline would remain in the hands of local investors, including the government.
Air New Zealand, which is Virgin Australia's largest shareholder, will resume trading on Wednesday after spending two days in a trading halt during the bookbuild. Moody's also reiterated its Baa3 rating and stable outlook for Air New Zealand following the sell-down.
The dual-listed airline has been the best performer of its regional competitors, out-performing Qantas and Virgin, which have been in the midst of a battle in Australia's domestic market.
Air New Zealand shares hit a five-year high last week despite high fuel prices and stiff competition on routes.
In contrast, shares in Qantas slid more than 4 per cent to $1.125 on Tuesday - their lowest since September last year - as it continued to ramp up pressure on the federal government to intervene in Virgin's recent capital-raising, which is set to result in Air New Zealand, Etihad and Singapore raising their stakes.