The Prime Minister says it was not appropriate for Air New Zealand to be supporting the Saudi Navy while it fueled a humanitarian crisis in Yemen.
"It just doesn’t pass New Zealand’s sniff test and I think (Air New Zealand) acknowledge that too," Jacinda Ardern said this morning after its involvement was revealed by 1 NEWS last night.
Air New Zealand's business unit, Gas Turbines, which specialises in servicing military marine engines and turbines, had been carrying out work on two engines and one power turbine through a third party contract.
"I don’t think it was appropriate they had the contract in the first place," Ardern said.
"This is something that has ramifications for New Zealand, its reputation and that’s why we’re making sure we’re across how it happened."
Ardern only became aware of Air New Zealand's involvement last night, as a result of 1 NEWS' inquiries.
"Very disappointing it’s so late in the piece we’ve become aware of it, but even more so, disappointing the leadership of Air NZ were in the dark as well."
Ardern's comments come as Air NZ chief executive Greg Foran was asked on Breakfast this morning if the unfinished work would be completed.
“We’ve got an engine that is in some pieces on the floor so we need to get that back in a condition that we can get that back to them... The job is not completely finished, so we’ll work through what that looks like at this point," he said.
Foran said he had only made aware of the situation 10 days ago, and that he took "immediate action".
"It has been suggested that we’ve been involved in some type of secret deal here and I can assure you that is not the case. It is a case of poor judgment," he said.
For nearly eight weeks, Air New Zealand refused to answer 1 NEWS' questions about its activities with Saudi Arabia.
Last week it finally issued a short statement saying Air New Zealand Gas Turbines had been carrying out work for the Saudi Navy through a third party contract.
"The Gas Turbines business has not contracted directly with the Royal Saudi Navy and will not be carrying out any further work of this nature."
Air New Zealand attributed the work for the Saudi Navy to a lack of "oversight".
Foran said the $3 million contract was first arranged through a third party in 2019, before he stepped into the CEO role, and because of the value of it, it was signed off at a level in the business which never reached executive level.
The New Zealand Government owns 52 per cent of Air New Zealand ordinary shares.
In recent years the Government has also contributed millions of dollars in humanitarian aid to Yemen.