I recall that during the term of the Loan we're required to operate to all Regions and a certain number of flights per day on the main trunks.
As for becoming an SOE, much like the Ansett Bailout the Government would likely wait until the last minute for a bailout. Why buy in at ~$1 shares when you can wait for them to plummet to 20c
Not sure what would change... probably put a hold on ULR flight, especially Newark, but that's probably going to happen anyway. Contracts would stay the same unless the Airline actually went under and was bought by the Government in a fire sale. However, the
PR fallout from that could go either way. Kiwis have a terrible tall poppy syndrome and relish in "overpaid rich fat cats who are John Key's best mates" losing their jobs while at the same time are heavily critical of the Government and CEO's exploiting workers.
I hope we can survive without going down the SOE road, but I'd rather fly for a Government Airline than not fly at all.