Virgin Australia brings back 10 leased Boeings as domestic demand revives

By Jamie Freed

SYDNEY, April 15 (Reuters) - Virgin Australia, the country's No. 2 airline, said on Thursday that 10 leased Boeing Co 737 planes would return to its fleet as part of plans that would see it reach more than 80% of pre-pandemic domestic capacity by mid-June.

The carrier, now owned by U.S. private equity group Bain Capital, had last year entered voluntary administration after the pandemic hit and sent many of its 737s back to lessors.

The Australian domestic market outlook is now improving having been hobbled for months by pandemic-related state border closures.

"More aircraft means more flying, and with easing travel restrictions, there are more opportunities to further support domestic tourism and the nation's economic recovery from COVID-19," Virgin Australia Chief Executive Jayne Hrdlicka said in a statement.

Larger rival Qantas Airways Ltd expects to average around 80% of pre-pandemic capacity in the quarter ending June 30 due in part to strong demand for leisure travel in a country where local transmission of COVID-19 has been almost eliminated.

Virgin Australia said it had finalised deals to reintroduce 10 Boeing 737-800s it had previously operated, with the addition of further planes under investigation.

The first three will join the airline's fleet this month, with the remainder set to progressively enter service by October, the airline said.

Virgin Australia has suspended the sale of most New Zealand services until Oct. 31 even though a two-way travel bubble is opening on April 19 as it focuses on bolstering its position in the domestic market.

Rival Regional Express Holdings Ltd last month launched Sydney-Melbourne flights using leased 737s previously operated by Virgin Australia in a challenge to incumbents. (Reporting by Jamie Freed Editing by David Holmes)