Less than three months after forming a corporate alliance, Virgin Australia has announced it will invest up to AU$8 million convertible debt instrument in Skywest Airlines.

Unveiled this morning, the purchase was made at a conversion price of up to AU$0.45 per share and if converted by the airline then Virgin Australia would hold up to ten percent of ordinary share capital in Skywest.

The regional airline’s executive chairman Jeff Chatfield said the purchase is a representation of confidence Virgin Australia has in Skywest business.

“Our current integrated offering with Virgin Australia is extremely valuable to major mining company customers who need to move large numbers of employees to and from their place of employment around Australia,” Mr Chatfield said.

“By late 2012, we expect to run rate revenue of ARAN business to be larger than the existing Skywest legacy RPT business.”