In an effort to cut cost for the sake of the development of its next generation spaceplane, Virgin Galactic will lay off a number of its employees and save on expenses in hopes of bringing in future profits from its commercial flights.
Richard Branson’s private space venture announced on Tuesday a “strategic realignment of the company’s resources and a related workforce reduction” so that it can focus on developing its Delta class of vehicles. Virgin Galactic did not specify how many employees would be laid off.
“Uncertainty has grown in the capital markets,” Michael Colglazier, Virgin’s chief executive officer, wrote in a memo to employees, citing interest rates and geopolitical unrest as factors that stood in the way of financing, according to BNN Bloomberg.
Virgin Galactic launched its space tourism services this past summer, with the first commercial flight taking off on June 29. Since then, the company has been hard at work sending crews to suborbital heights on board the VSS Unity spaceplane. Virgin Galactic’s sixth commercial flight recently launched on November 2, carrying planetary scientist Alan Stern and science communicator Kellie Gerardi to the edge of space.
Despite the frequent launches, Virgin Galactic admitted that its commercial flights won’t generate much revenue. During an earnings call in August, the company announced a revenue of $US2 million in the second quarter of 2023 following the success of its first commercial flight but anticipated $US1 million in revenue for each of the next two quarters.
The reason for the low revenues is partly due to the company selling about three-fourths of the first 800 tickets at a price tag of between $US200,000 and $US250,000. Virgin Galactic later raised its ticket prices to $US450,000 each.
The company also anticipates that its next generation spaceplane will bring in more revenue. The Delta vehicles are designed to fly more frequently and at a lower cost than its predecessor, Unity.
“The Delta ships are powerful economic engines,” Colglazier wrote in the memo, according to SpaceNews. “To bring them into service, we need to extend our strong financial position and reduce our reliance on unpredictable capital markets. 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.”
Virgin Galactic is trimming its team to keep its spaceship dreams afloat. It’s a tough call, but then again, space is hard—even if it is the edge of space.