Virgin Australia says it is on track to return to pre-bankruptcy levels of domestic flying next year as the airline looks to get back on its feet after being pushed into administration by the COVID-19 pandemic.

Australia’s number-two airline revealed the bullish outlook in its 2021 financial accounts, lodged with the corporate regulator on Tuesday, setting up a potentially bruising showdown with larger rival Qantas and new competitors Rex (Regional Express) and Bonza.

Virgin’s accounts show it booked revenue of $1.5 billion in the 12 months to June 30, down from $4.5 billion in 2020, as the pandemic grounded flights for much of the year.

The airline shut down its budget arm, Tigerair, laid off a third of its workforce (around 3000 workers) and cut its mainline operations back to 58 aircraft when it went into administration under a $6.8 billion debt pile in April 2020.

US private equity giant Bain Capital bought the group last November and has been gradually rebuilding its operations, with an order confirmed last month for seven more Boeing 737s set to grow its fleet to 84 jets.

Virgin’s financial report says it was planning a “progressive recovery in the group’s domestic airline operations to pre-COVID capacity levels during 2022, supported by the easing of extended border closures experienced during 2021”.

“The additional aircraft will support the ramp up and the group achieving its stated aim of capturing 33 per cent share of the domestic market.”

Virgin’s expected return to pre-administration capacity indicates Australia’s domestic aviation market will be increasingly competitive in 2022.

Qantas boss Alan Joyce has said he wants his airline group, which includes Jetstar, to secure at least 70 per cent market share after the pandemic. Meanwhile, country airline Rex (Regional Express) has leased six Boeing 737 jets and is flying between capital cities in direct competition to the two dominant airline groups.