What's next for Virgin Galactic after halting spaceflights by mid-2024
What's the story
Virgin Galactic plans to decrease the number of flights for its current suborbital vehicle, VSS Unity, and halt operations by mid-2024. The company started flying paying customers to space in June.
The company's focus will shift to the development of its next generation of vehicles, called Delta class.
VSS Unity flights will now occur quarterly, starting with Galactic 06 in January and followed by Galactic 07 in the second quarter. The third mission, Galactic 08, is still to be determined.
Details
Layoffs and cost-cutting measures
On November 7, Virgin Galactic declared it intends to lay off 185 employees, which is about 18% of its workforce, and cut other expenses to allocate resources to the Delta-class vehicles.
CEO Michael Colglazier says that the company has gained the necessary knowledge about spaceflight operations and customer experiences from the five commercial flights conducted between June and November, per SpaceNews.
He also noted that "the total costs to support Unity's flights surpass the relatively modest monthly revenues."
Revenue
Focus on higher revenue opportunities with upcoming Unity flights
For the remaining Unity flights, Virgin Galactic will focus on higher revenue opportunities like research, which generates more revenue per seat than private astronauts.
Colglazier mentioned that some seats might be sold to private astronauts willing to pay a "premium price" of up to $1 million each, compared to the current price of $450,000 (about Rs. 3.7 crore).
After Unity flights cease, company staff at Spaceport America, New Mexico will relocate to a new factory—near Phoenix—to help assemble Delta-class vehicles.
Insights
Delta-class vehicles aim for positive cash flow in 2026
The workforce reduction and cost-saving measures, along with a stock sale in Q3, are expected to provide enough funding for Virgin Galactic to finish developing the first two Delta vehicles and commence commercial flights in 2026.
The company concluded the quarter with $1.1 billion in cash and equivalents on hand.
Delta-class vehicles are anticipated to fly twice a week as opposed to Unity's monthly flight. Delta can carry six customers, and generate 12 times more revenue per month than Unity.