WASHINGTON – Virgin Galactic has announced it will lay off staff and cut costs to conserve resources for the next generation of suborbital spaceplanes.
In a statement on November 7, Virgin Galactic announced a “strategic realignment of the company’s resources and associated workforce reductions” to allow the company to focus on the development of the Delta class of vehicles, on which the company has its future hopes has set.
The company did not provide any further information, including the number of people laid off. It is still in the process of notifying each employee individually and will provide further information in a previously scheduled conference call on November 8th.
The company’s facilities will remain closed for the remainder of this week. Virgin Galactic reported in an annual report filed with the Securities and Exchange Commission in February that it had 1,166 employees at the end of 2022.
In a memo to employees, Virgin Galactic Chief Executive Michael Colglazier said the layoffs and other cost cuts were aimed at preserving the company’s resources so it can focus on developing the Delta vehicles, which will fly more frequently and faster at a lower cost than its existing SpaceShipTwo suborbital spacecraft, VSS Unity.
He also cited “uncertainty” in markets caused by high interest rates and geopolitical events. That uncertainty, he said, “makes short-term access to capital much less favorable.”
“The Delta ships are powerful economic engines,” he wrote. “To get them operational, we need to build on our strong financial position and reduce our dependence on unpredictable capital markets. We will achieve this, but to do so we must redirect our resources to the Delta ships while streamlining and reducing our work outside of the Delta program.”
The company reported that it had cash and equivalents of $980 million at the end of the second quarter of this year, while it reported a net loss of $134.4 million. The company did not disclose its estimated cost of developing the Delta vehicles, but said it expects these vehicles to enter service in 2026. The company expects only limited revenue from VSS Unity, which is capable of flying up to four customers at a time on a monthly basis.
Virgin Galactic has previously taken other steps to reduce costs. The company announced in May that it was postponing for about a year work on a new series of motherships designed to carry the Delta-class spaceplanes into the air, concluding that the aircraft it currently has used for VSS Unity flights, VMS Eve, could also be used for test flights of Delta class vehicles. The company had also all but abandoned plans to bring another spaceplane, VSS Imagine, into service before the introduction of the Delta line of vehicles.
Colglazier did not specify in the memo what impact the layoffs would have on VSS Unity’s operations. Virgin Galactic completed the fifth commercial flight of the Galactic 05 spacecraft on November 2 with two researchers and a private astronaut. This was the vehicle’s last scheduled flight of the year as it and VMS Eve enter an annual maintenance period. The company said after Galactic 05 that flights would resume in January.