* Will bring fleet of 737s to 77 planes

* Had 85 737s in June 2020, handed back some to lessors

* Expects rise in travel demand as state borders reopen (Adds CEO statement, fleet details)

By Jamie Freed

SYDNEY, Aug 27 (Reuters) – Virgin Australia said on Friday it would add nine Boeing Co 737-800 planes to its fleet from October in preparation for an expected increase in domestic travel as vaccination rates rise and state borders reopen.

The airline said the increased capacity would bring its fleet to 77 planes and help it meet its target of gaining a one-third share of the domestic market, where it competes against Qantas Airways Ltd and Regional Express Holdings Ltd.

“These extra aircraft are an important part of our planning and ensure we’re ready to ramp up flying and meet the pent-up demand for domestic travel as soon as the opportunity presents itself,” Virgin Chief Executive Jayne Hrdlicka said in a statement.

Under the ownership of U.S. private equity group Bain Capital, Virgin has been rebuilding its fleet of 737s after emerging from voluntary administration last year and handing back many of its planes to lessors.

Virgin had 85 737s as of June 30, 2020, according to a report from administrator Deloitte that included four at its now-closed budget airline Tigerair Australia, so its fleet will still be smaller than pre-COVID levels.

The recovery in the Australian domestic aviation market has been hindered by recent lockdowns affecting more than half of the country’s population, which have led airlines to cut capacity and idle thousands of workers without pay.

Qantas said on Thursday it expected states to reopen their borders to locked-down New South Wales and Victoria on Dec. 1. Virgin said it aimed for all nine of the added planes to be in the air by mid-February. (Reporting by Jamie Freed; Editing by Jacqueline Wong and Gerry Doyle)

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