Virgin Galactic is cutting costs and reducing workforce as it looks to scale up production of its next-generation suborbital space planes.
In a memo to staff sent on Tuesday, Virgin Galactic CEO Michael Colglazier said uncertainty in capital markets and geopolitical turmoil have “made access to capital much less favorable in the near term.” That’s not good news for a company like Virgin Galactic, which has had to simultaneously focus on scaling the commercial operations of its original vehicles, the VSS Unity suborbital vehicle and the Eve aircraft, while also working to create a fleet of new generation ships. calls Delta.
“The Delta ships are powerful economic engines. To deploy them, we must increase our strong financial position and reduce our dependence on unpredictable capital markets,” said Colglazier. “We will achieve this, but it requires us to focus our resources on the Delta ships while streamlining and reducing our work outside the Delta program.”
Colglazier added that the company will call each employee to confirm their employment status, and that these calls will continue through Thursday. The Orange County, California-based company had about 1,100 employees at the beginning of this year.
Virgin Galactic, which just completed its fifth commercial flight with the VSS Unity spaceplane, has previously said it wants to deploy Delta commercially by 2026 – but this will almost certainly happen at little cost. Although Virgin Galactic has not publicly stated how much it expects to 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 critical for the company to one day become profitable. These ships are designed to fly more often – up to 400 times a year – based on a ‘standardized production model’, making them cheaper to produce and maintain.
The company reported a net loss of $134.4 million and revenue of $1.9 million at the end of the second quarter. Virgin Galactic ended the quarter with approximately $980 million in cash and securities on hand.
Virgin Galactic did not provide further details about the layoffs, including the number of employees affected. More information will be provided during the company’s third-quarter earnings call scheduled for Wednesday, the company said.