KiwiRail is preparing to take a "substantial" financial hit from the breakdown of the Cook Strait ferry Aratere, and is likely to have to go cap-in-hand to the Government.

Chairman John Spencer said KiwiRail, which operates the Interislander service, would not know how much the ferry would cost taxpayers until all the facts were known about how it came to lose a propeller in Cook Strait.

"But obviously we're going to sit down with the Government and see what the solutions are," he said.

"We've already alerted the Government to this issue ... we'll certainly be having to look at some additional funding."

The Aratere has been out of action since November 5 when a shaft broke during a sailing from Picton to Wellington, causing it to lose a propeller. It continued its journey on one engine.

It is expected to be out of commission for at least six months.

Spencer and KiwiRail chief executive Jim Quinn faced a barrage of questions from MPs about the crippled ship when they appeared before the Transport and Industrial Relations select committee today.

Quinn said he did not expect the Aratere's absence would lead to any job cuts "at this stage".

KiwiRail was still looking at the options to replace the Aratere, with the most likely option being to lease a ship from either Europe or Asia, he said, but a replacement ship would not be in service here until January at the earliest.

"Bringing in ships is not like jumping in a rental car unfortunately," Quinn said.

"You've got to commission things and get them approved."

When asked by Labour Transport spokeswoman Darien Fenton if it was true KiwiRail had considered putting the Navy's roll-on, roll-off ship Canterbury into service on Cook Strait, Quinn said "we've talked to everybody".

Both Quinn and Spencer bristled at suggestions from NZ First leader Winston Peters that a lack of maintenance was to blame, but Spencer admitted that could not be ruled out until an investigation into the cause of the problem had been completed.

"But what I can assure you is there's been no reduction of maintenance costs in respect of the Interislander," he said.

Quinn said it was "a significant piece of steel" that broke.

"This isn't a maintenance-type issue where an engine has just gotten old," he said.

"Could it be preventable? Well the cause will tell you that, and we'll be learn from that and we'll be open about that."

KiwiRail has a board meeting scheduled for tomorrow. But Quinn could not say whether he would be in a position to seek permission for a replacement ship.