The airline has been loss-making in all but two years since 2003, when it was bought by the States for £5m.
Previously the Treasury and Resources Department had expected Aurigny to return to profit by 2016, but that has now been revised to 2018.
Its report, which will be voted on next month, said the "ongoing loss-making position" was a "cumulative result of a number of key factors".
Cabernet Ltd, the holding company for Aurigny Air Services and Anglo Normandy Engineering, operates through borrowing guaranteed by the States.
The debt to be written off is £19.9m accumulated from 2003 to 2014 and the expected £5.3m loss up to 2017 - £2.3m in 2015, £1.5m in 2016 and £1.5m in 2017.
It will be paid out of the island's capital reserve.
Aurigny performance in 2014
Aurigny has borrowed more than £50m, guaranteed by the States, to support its business and the purchase of new aircraft.
The proposals also include allowing the department to be able to provide short-term borrowing to Cabernet to cover the annual losses.
The department's report said it was "firmly of the view" retaining the company "remains overwhelmingly in the Bailiwick's strategic interest", although it said this included recognising the "risk that ongoing financial support will be required".
Treasury Minister Gavin St Pier said it was a "strategic asset" acquired to secure the route to Gatwick, which "is as important now as it was in 2003".

Increasingly services are springing up offering quick fixes for the annoyance of cracked screens or broken home buttons.
New entrant, iCracked, is hoping its model of sending technicians to customers, sometimes within an hour, will help it win market share.
But critics questioned what impact it would have.
The firm already operates in 250 US cities and as the name suggests, focuses mainly on iOS devices but also repairs some Samsung models.
The prices it will charge for fixing devices will vary but will average about £57, according to the firm.
"For most people, their phone is an extension of themselves, so when it breaks it can have a huge impact on the way they go about their everyday lives," said founder A J Forsythe.
The firm began life in 2010 at a US university where Mr Forsythe was a student.
"I started handing out flyers around campus and people would call me and I'd fix their device," he told the BBC.
Growth came fast and the firm now employs 1,000 technicians across the US.
Its UK launch will initially be focused in London with 30 technicians which it hopes to expand to 100 next year.
Customers can call out a fixer either via the iCracked website or its app. They then arrange a time for them to come to their home, office or local coffee shop to repair the device.
There is a burgeoning industry springing up around smartphone repairs. High street shops offer drop-in services where they can repair phones or tablets in a matter of hours, often more cheaply than iCracked.
Websites such as Quick Fix Mobile also offer repairs within 24 hours, with prices averaging £30 - £50 for a broken screen.
Marketing manager Sean Barber was dismissive of iCracked.
"I'm not sure why these big companies come from the US and make such big news. There are already plenty of others in the UK already offering this service."
He compared iCracked's launch with that of Uber, the lift-sharing service which has proved controversial to the taxi industry.
"I don't think iCracked is going to disrupt the market like Uber did. You still have to book an appointment with a technician and in that time, a customer could have come to a service like ours and had it fixed," he said.
Mr Forsythe admitted that some may question the need for an emergency service for iPhones, but said that demand was there.
"We're seeing hundreds of requests each day and we are expecting London to be one of our busiest cities.
"I wouldn't say that it is limited to a First World problem."
Apple did not wish to comment on the service but on its website it advises customers to contact their carrier or Apple to arrange service for damaged devices. Users can also take broken phones into stores.
There is also a growing trend for do-it-yourself services such as the Restart Project - which gives amateurs advice on how to extend the life of their gadgets.
Aurigny could have debts of more than £25m paid off by Guernsey's government.
[NEXT_CONCEPT]
A US firm is launching an emergency repair service for broken or damaged smartphones in the UK.