Virgin Galactic, the space tourism company founded by Richard Branson, has described a significant planned reorganization and an associated reduction in its workforce. The move is aimed at preserving resources to highlight the growth of their next-generation suborbital spaceplanes, the Delta class of vehicles. Let’s delve into the attributes of this strategic shift and its potential influence on the company.
As of November 7, Virgin Galactic has refrained from disclosing specific figures related to the scale of workforce reductions. The company has indicated that it is currently in the process of individually notifying affected employees and intends to furnish more comprehensive details during its scheduled earnings call on November 8. In its annual report submitted to the Securities and Exchange Commission in February, Virgin Galactic acknowledged having 1,166 employees at the close of 2022.
Reasoning Behind the Company’s Restructuring
Virgin Galactic’s CEO, Michael Colglazier, has conveyed to the company’s workforce that the staff reductions and additional cost-cutting measures are implemented with the goal of securing the necessary funding for the development of the Delta class of spaceplanes. These new spacecraft are designed to be more financially efficient and to operate with increased frequency when compared to Virgin Galactic’s current suborbital spaceplane, VSS Unity. Colglazier has also cited “uncertainty” in the financial markets stemming from factors such as high interest rates and geopolitical events, which have rendered accessing capital in the short term less advantageous.
Virgin Galactic: Embracing the Delta Class Spaceplanes
Virgin Galactic’s aspirations for the future hinge on the Delta class of spaceplanes. Colglazier underscored the significance of these Delta vessels as formidable economic drivers. In order to ensure their successful deployment, the company is reallocating resources to prioritize this project while simplifying and reducing efforts outside of the Delta program.
The company’s second-quarter financial report disclosed that Virgin Galactic had $980 million in cash and equivalents. However, during that same period, they reported a net loss of $134.4 million. Although the company has not disclosed the approximate development value for the Delta class vehicles, they anticipate these new spaceplanes will enter service in 2026. The expectation of limited profits from the existing VSS Unity, which carries up to four customers at a time and operates monthly, underscores the importance of transitioning to the Delta class for Virgin Galactic’s future profitability.
Virgin Galactic: Previous Cost Reduction Measures
Virgin Galactic has recently implemented other measures to decrease costs. In May, they deferred work for approximately one year on a new line of mothership aircraft designed to carry Delta-class spaceplanes into the atmosphere. Instead, they decided to use their current mothership, VMS Eve, for test flights of Delta-class vehicles. Furthermore, plans for another spaceplane, VSS Imagine, were essentially abandoned in favor of the Delta line.
Impact on Current Operations
The workforce depletion raises questions about how it might affect the ongoing operations of VSS Unity, the company’s current suborbital spaceplane. Virgin Galactic recently finished its fifth commercial flight of VSS Unity, known as Galactic 05, on November 2, carrying two researchers and a private astronaut. The company has indicated that no more programmed flights are worked out for the year, as both VSS Unity and VMS Eve enter a yearly conservation period. Flights are expected to recommence in January.
Virgin Galactic’s planned realignment and workforce depletion are significant steps for the company as it refocuses its efforts on the growth of the Delta class of spaceplanes. This move underscores the challenges in the emerging space tourism industry and the need for long-term financial stability. As the company progresses with its Delta program and continues to navigate the evolving landscape of space tourism, observers will be closely watching for developments and the potential influence on the broader industry.
