The sell-down of shares will leave the Government with 53% of the national carrier and control of the company.
Shares are in a trading halt while the book build continues today. Shares in the book build start at $1.60 and move up in 1c increments. Shareholders will know tonight the price they will pay.
The shares closed on Friday at a five-year high of $1.65. In 2002, the Labour government bought shares in Air NZ for 24c and 27c, to stop the airline going into liquidation.
If the shares sell at $1.65, the Government will make about $362 million from the deal. During its ownership, the Government has also received dividends.
Forsyth Barr broker Andrew Rooney viewed Air New Zealand as an attractive investment for those pursuing a higher risk-reward strategy.
Among the key investment characteristics were the potential for higher earnings, the airline continuing to outperform its peers, significant operational benefits from fleet upgrades and the removal of Government influence overhanging the shares.
''We believe Air New Zealand will deliver sustainable profit growth over the medium-term as the full benefits of fleet investments, changes made to long-haul routes and strategic alliances are reaped.
''The company is outperforming its global peers, helped by strong management and an enviable structural position market.''
The lack of interest from retail investors so far was probably a reflection of the fact that had they wanted to buy into the company before they would have done so already, given 23% of the company was already listed, he said.
Institutional investors would also bid into the offer, but the Government wanted to give preference to New Zealand investors, Mr Rooney said.
Morningstar analyst Will Culbert has retained a hold on the shares but retains a ''no moat'', or industry advantage, rating, reflecting the competitive nature of the airline industry.
Morningstar has a $1.50 fair value estimate on Air New Zealand shares.
''Fuel remains a wild card and continued escalation in oil prices might lead to further margin deterioration. The airline industry is highly competitive and all airlines are susceptible to extreme price competition stemming from the emergence of low-cost carriers and capacity increases.''
Air New Zealand was also subjected to currency risk, because a vast majority of its costs were denominated in US dollars, he said. The airline's profitability, like fuel, was inversely correlated to the US dollar.
Air New Zealand also faced investment risk, stemming from its large equity position in Virgin Australia, Mr Culbert said.
Finance Minister Bill English says, if re-elected in 2014, National is not planning any more asset sales, largely because everything that can be sold will have been by then.
Air New Zealand
Bulls say
• Air NZ is in an unassailable position as the dominant New Zealand carrier. It also has a strong transtasman presence. Both these routes are immensely profitable to the company.
• Air NZ is well-positioned to capitalise on any upswing in demand, supported by new aircraft orders.
Bears say
• Airlines are poor long-term investments and Air NZ's return profile will be similar.
• Jetstar is likely to maintain an aggressive posture in New Zealand, which could eventually result in lower air fares - good for travellers but bad for Air NZ.
