Virgin Galactic has made the strategic decision to reduce its workforce and cut down on expenses as it shifts its attention towards the development of the Delta class of suborbital spaceplanes. This move is aimed at conserving resources and prioritizing the company’s future endeavors.
While specific details, such as the number of employees being affected, were not provided, the company mentioned that the process of notifying impacted employees is ongoing. Further information on these changes will be presented during the company’s scheduled earnings call on November 8.
The company also disclosed that its facilities would remain closed for the week. According to Virgin Galactic’s annual report filed with the Securities and Exchange Commission in February, the company had 1,166 employees as of the end of 2022.
The Focus on Delta Class
Michael Colglazier, CEO of Virgin Galactic, highlighted that these workforce reductions and cost-cutting measures are in alignment with the company’s commitment to preserving its financial resources for the development of the Delta class of spaceplanes. The Delta vehicles are envisioned to offer more frequent and cost-effective suborbital flights, distinguishing them from the existing SpaceShipTwo suborbital vehicle, VSS Unity.
Colglazier also pointed out the “uncertainty” in the markets, attributing it to high-interest rates and geopolitical events. He emphasized that such uncertainty has made it less favorable to access capital in the near term. In light of this, the company aims to direct its resources towards the Delta program, while streamlining and minimizing activities outside this program.
In his message to employees, Colglazier stated, “The Delta ships are powerful economic engines,” and continued, “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.”
Financial Snapshot and Future Projections
Virgin Galactic reported having $980 million in cash and equivalents at the close of the second quarter of the current year, coinciding with a net loss of $134.4 million. Although the estimated costs for developing the Delta vehicles were not disclosed, the company anticipates their entry into service by 2026. While the existing VSS Unity can accommodate up to four customers per monthly flight, the company projects only limited revenue from it.
Previous Cost-Cutting Measures
The company had previously implemented cost-saving measures, including delaying work on a new line of mothership aircraft by approximately a year, which are responsible for carrying the Delta-class spaceplanes into the air. The decision was made considering the possibility of utilizing the current mothership aircraft, VMS Eve, for test flights of Delta-class vehicles. Virgin Galactic had also deprioritized the introduction of another spaceplane, VSS Imagine, before the rollout of the Delta line of vehicles.
It remains to be seen how these workforce reductions will impact the operations of VSS Unity, especially after it recently completed its fifth commercial flight, Galactic 05, carrying two researchers and a private astronaut. With VMS Eve, both vehicles are now set to undergo annual maintenance, with flights resuming in January, as announced by the company.
Virgin Galactic is navigating through a crucial phase in its journey, making tough decisions to ensure it remains on track for its ambitious plans in the space tourism industry. The strategic realignment underscores the challenges and uncertainties that are often associated with groundbreaking endeavors in space exploration.