WASHINGTON — Virgin Galactic will reduce the frequency of flights of its current suborbital vehicle and stop them entirely by mid-2024 as it concentrates resources on the next generation of vehicles.
In a Nov. 8 earnings call, company executives said flights of VSS Unity, which completed its fifth commercial suborbital mission Nov. 2, would move to a quarterly frequency starting with its next mission, Galactic 06 in January. That would be followed by Galactic 07 early in the second quarter.
There could be a third mission, Galactic 08, around the middle of the year, but Michael Colglazier, Virgin Galactic’s chief executive, said the company had not decided yet whether to fly that mission before moving personnel and other resources to work on its Delta-class of vehicles.
Virgin Galactic announced Nov. 7 it would be laying off staff and reducing other expenses to concentrate resources on the Delta class, which Colglazier said was key to the company’s future. The company said in a Securities and Exchange Commission filing that it would be cutting 185 jobs, or about 18% of its current workforce.
That announcement did not provide any indications about the future of Unity, but Colglazier suggested in the earnings call that the company had learned what it needed about spaceflight operations and the experience of its customers over the five commercial flights it carried out between June and November.
“Unity’s flight objectives are to demonstrate our system, showcase our astronaut experience and provide learnings for our Delta program,” he said. “The total costs to support Unity’s flights surpass the relatively modest monthly revenues.”
“The big move we’re making here is pivoting the resources that have been put into the Unity flights and redirecting them over to get the Delta ships done with the cash we have on hand,” he said later in the call.
Colglazier said that for the remaining flights, Virgin Galactic will concentrate on higher revenue opportunities. That includes research, which offers more revenue per seat than private astronauts. He said some seats might be sold to private astronauts who are willing to pay a “premium price” of up to $1 million each, versus the current price of $450,000.
Once Unity flights end, he said company staff who work on the vehicles at Spaceport America in New Mexico will go to a new factory near Phoenix the company expects to complete in the second quarter of 2024 to help with the assembly of the first Delta-class vehicles. Doing so, he said, will help with company resources and give personnel experience with the spaceplanes before test flights begin in 2025.
Those layoffs and other cost-cutting measures, along with a sale of stock in an “at-the-market” deal in the third quarter, should give the company enough funding to complete development of the first two Delta vehicles and begin commercial flights in 2026, the company concluded. Virgin Galactic ended the quarter with $1.1 billion of cash and equivalents on hand.
He said the company projected that the Delta-class vehicles will be able to fly twice a week, versus the monthly cadence of Unity flights. With the Delta vehicles able to carry six customers versus four on Unity, each Delta vehicle will be able to produce 12 times as much revenue per month as Unity.
That is key, executives said, in enabling the company to achieve a positive cash flow in 2026, with the increased revenues from Delta flights and a reduction in expenses from the end of the vehicles’ development.
“We project we have sufficient capital to build the revenue-generating assets necessary to achieve positive free cash flow,” said Doug Ahrens, the chief financial officer of Virgin Galactic. He added there is still $113 million available in its at-the-market stock offering it can sell for additional funding.
Virgin Galactic reported $1.7 million in revenue in the third quarter from its spaceflight as well as “membership fees” from customers, and projects $3 million in revenue in the fourth quarter. The company had a net loss of $105 million in the third quarter.
