Virgin Australia stake in Skywest supports long-term growth of regional and resource markets

Virgin Australia's planned AUD8 million (USD8.3 million) investment for a 10% stake in regional carrier Skywest will allow it to further capitalise on the country's strongly performing regional and resource markets. Virgin and Skywest had previously announced a partnership and then alliance, which received draft approval in Mar-2012.

The stake follows a number of similar arrangements undertaken by airlines in deep partnerships with each other: Etihad in airberlin and then Air Seychelles as well as Air New Zealand in Virgin Australia (a move largely seen to preempt Etihad from taking a stake in Virgin). Such partnerships allow the investing airline to further gain financially from the airline it is benefitting with increased network access. Virgin ended 1H2012 with AUD851 million (USD879 million) cash balance, AUD506 million (USD523 million) unrestricted, making the Skywest stake a relatively small expenditure.