Branson's wallet snaps shut for Virgin Galactic
Suborbital space tourism outfit to move forward without beardy bailouts
Sir Richard Branson is leaving his space tourism company, Virgin Galactic, to stand or fall on its own two feet after declaring that his business empire will not be tipping any more cash into the project.
Branson told the Financial Times: "We don't have the deepest pockets after COVID, and Virgin Galactic has got $1 billion, or nearly. It should, I believe, have sufficient funds to do its job on its own."
Virgin Galactic was founded in 2004. Despite setbacks including the crash of VSS Enterprise, the space tourism biz finally managed a suborbital jaunt to the edge of space in 2018. It performed the feat again a few months later in 2019 before flying Branson and pals in a crewed flight in 2021.
Branson's flight proved controversial, and attracted the ire of the Federal Aviation Authority (FAA) for venturing outside of its allocated airspace. Other issues have kept Virgin Galactic's suborbital tourism ambitions on the ground until 2023.
Things appeared to be looking up this year as the luxury operator began commercial business again after a successful suborbital test flight and approached a near-monthly cadence. But with tickets starting at $450,000 and a maximum of four paying passengers per flight, turning a profit using the VSS Unity spaceplane and VMS Eve carrier aircraft combination is wishful thinking.
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To that end, Virgin Galactic is looking to its upcoming Delta class of spaceplane, which can carry up to six passengers. It also expects eight flights – and revenues of between $21.6 million and $28.8 million per ship – per month from the forthcoming class, according to its third quarter 2023 earnings update [PDF].
However, Virgin Galactic will still be burning cash to get there. Revenue guidance for Q4 2023 stood at $3 million, while its cash flow was expected to be between $125 and 135 million. Virgin Galactic will also be switching to a quarterly cadence before pausing flights of VSS Unity in mid-2024 to focus on building the Delta ships.
Why the need to pause? As well as calling a halt to unprofitable flights, this is likely due, at least in part, to staff cuts announced by boss Michael Colglazier. All told, approximately 185 employees – around 18 percent of the workforce – are to leave the building as the biz seeks to cut costs and focus on what is most likely to make money: the Delta class spaceplanes.
Those employees will not be alone. While Branson told the FT he was "still loving" the Virgin Galactic project, that love does not appear to extend to the entrepreneur's wallet.
His other rocket startup, Virgin Orbit, perished earlier this year. ®