WASHINGTON — Virgin Galactic said it will lay off staff and cut expenses to conserve resources for its next generation of suborbital spaceplanes.
In a statement Nov. 7, Virgin Galactic announced a “strategic realignment of the Company’s resources and a related workforce reduction” to allow the company to focus on development of the Delta class of vehicles the company has pinned its future hopes on.
The company did not provide specifics, including the number of people who are being laid off, saying it was still in the process of individually notifying individual employees and that it would provide more information in a previously scheduled earnings call Nov. 8.
The company’s facilities will be closed through the rest of this week. Virgin Galactic reported having 1,166 employees as of the end of 2022 in an annual report filed with the Securities and Exchange Commission in February.
In a memo to employees, Michael Colglazier, chief executive of Virgin Galactic, said the layoffs and other reductions in expenses are intended to conserve the company’s funding so it can focus on development of the Delta vehicles, which are intended to fly more frequently and at a lower cost than its existing SpaceShipTwo suborbital vehicle, VSS Unity.
He also cited “uncertainty” in the markets caused by high interest rates and geopolitical events. That uncertainty, he said, “makes near-term access to capital much less favorable.”
“The Delta ships are powerful economic engines,” he wrote. “To bring them into service, we need to extend our strong financial position and reduce our reliance on unpredictable capital markets. We will accomplish this, but it requires us to redirect our resources toward the Delta ships while streamlining and reducing our work outside of the Delta program.”
The company reported having $980 million of cash and equivalents on hand at the end of the second quarter this year, when it reported a net loss of $134.4 million. The company has not disclosed its estimated costs for development of the Delta vehicles, but said it expected those vehicles to enter service in 2026. The company expects only limited revenue from VSS Unity, which is able to fly monthly carrying up to four customers at a time.
Virgin Galactic has previously taken other steps to reduce costs. The company said in May it was deferring work for about a year on a new line of mothership aircraft that will carry the Delta-class spaceplanes aloft, concluding that the plane it currently uses for VSS Unity flights, VMS Eve, could also be used for test flights of Delta-class vehicles. The company had also all but abandoned plans to bring another spaceplane, VSS Imagine, into service before introducing the Delta line of vehicles.
Colglazier, in the memo, did not state what impact the layoffs would have on operations of VSS Unity. Virgin Galactic completed Galactic 05, its fifth commercial flight of the vehicle, Nov. 2, carrying two researchers and one private astronaut. That was the last scheduled flight of the vehicle this year as it and VMS Eve go into an annual maintenance period. The company said after Galactic 05 that flights would resume in January.
