Virgin Galactic is cutting costs and reducing staff as it looks to scale production of its next-gen line of suborbital spaceplanes.
In a memo to staff sent Tueday, 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.”
Colglazier added that the company will be calling each employee to confirm their employment status, and that these calls will continue through Thursday. The Orange County, California-based company had around 1,100 employees as of earlier this year.
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.
The company reported a net loss of $134.4 million at the end of the second quarter and $1.9 million in revenues. Virgin Galactic ended the quarter with around $980 million of cash and securities on hand.
Virgin Galactic did not provide further details on the layoffs, including the number of employees affected. More information will be provided during a third quarter earnings call scheduled for Wednesday, the company said.