Air New Zealand chairman John Palmer doubts whether top quality management talent can be attracted to companies which are 100% owned by the Government.
The airline, which is 74% owned by the Government, recently appointed former Unilever executive, Christopher Luxon, to take over as chief executive after Rob Fyfe steps down later this year.
Mr Palmer, who also chairs State coal miner Solid Energy, says Mr Luxon wouldn't have taken the top job if Air New Zealand was fully-owned by the Government.
He says he knows from experience that the boards of fully state-owned companies are constantly considering the political dimensions of their decisions.
Mr Palmer says Mr Luxon took the Air New Zealand job on the basis that he would be running the company along more commercial lines.
Speaking at a parliamentary select committee on Wednesday, Mr Palmer, told MPs that Air New Zealand is confident about the coming year and some pressures on it, such as high fuel prices, have abated slightly.
"That's a reflection of intense effort by the company to both position itself competitively in areas where we think we can grow, to pay very close attention to our cost base, and helped by the hedge position that we've had in what has been a rising exchange rate now being neutral and the fuel position looking a little more positive for us in the coming years".