A memorandum of understanding between the three parties will see the establishment of a Merger Implementation Office led by Sir Mekere Morauta, Minister for Public Enterprises.
The Office will establish a transaction structure and implementation timeline.
Airlines PNG says the merger is expected to bring great opportunities and it has immediate plans to extend routes into a range of rural areas not presently well served.
The merger will enable the combined airline, which will operate one of the largest fleets in the South Pacific, to better cover an extensive range of international and domestic destinations.
A larger, stronger national carrier is also expected to provide increased employment opportunities for PNG staff.
The merger is subject to the approval of Airlines PNG shareholders and approval of the final transaction by the government, together with corporate, regulatory and third party approvals.
Spotter: Peter Kranz