Virgin Galactic is cutting costs and reducing staff by 18% as it looks to scale production of its next-gen line of suborbital spaceplanes.
In a memo to staff sent Tuesday, Virgin Galactic CEO Michael Colglazier said that uncertainty in capital markets and geopolitical unrest have made “near-term access to capital much less favorable.” That’s not good news for a company like Virgin Galactic, which has simultaneously had to focus on scaling commercial operations of its initial vehicles, the VSS Unity suborbital vehicle and the Eve aircraft, while also working to create a fleet of next-gen ships the company calls Delta.
“The Delta ships are powerful economic engines. To bring them into service, we need to extend our strong financial position and reduce our reliance on unpredictable capital markets,” Colglazier said. “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.”
Overall, the company is laying off 185 employees, or 18% of its workforce, which will result in an annual cost savings of around $25 million. Colglazier added that the company will be calling each employee to confirm their employment status, and that these calls will continue through Thursday.
Virgin Galactic, which just completed its fifth commercial flight of the VSS Unity spaceplane, has previously said that it’s looking to bring Delta into commercial service by 2026 — but it almost certainly will come at no small cost. While Virgin Galactic has not publicly stated how much it anticipates it will spend to bring Delta ships online, the company has already spent many millions on research and development for the future fleet.
But having Delta ships operational will likely be key to the company ever hoping to achieve profitability. Those ships are being designed to fly more often — as in, up to 400 times per year — based on a “standardized production model” that will make them cheaper to produce and maintain.
In order to get there, the company said Wednesday that it would ramp down flights of VSS Unity to once per quarter before pausing in mid-2024 to focus on Delta ship assembly.
The company reported a net loss of $104.6 million at the end of the third quarter and $1.7 million in revenues. Virgin Galactic ended the quarter with around $1.1 billion of cash and securities on hand.
The story has been updated to reflect further details that were released Wednesday, including the company’s third quarter earnings.