Virgin Galactic announces layoffs, pause of space flights

Virgin Galactic announced Wednesday it would be scaling back and then pausing flights to space next year from Spaceport America and that the company instead will funnel resources into developing its next generation spacecraft.

CEO Michael Colglazier made the announcement while reporting on the company‘s financial results for the third quarter that ended Sept. 30, during which the space tourism company reported a net loss of $105 million. Virgin Galactic also announced Wednesday that it would be laying off about 185 employees, which roughly comprises 18% of Virgin Galactic‘s workforce, according to media reports.

During a presentation about the company‘s finances, Colglazier reported that the company would be making changes to its operating model.

That includes reducing its net spending within spaceline operations. The VSS Unity rocketship, which launches from Spaceport America in southern New Mexico, will reduce its frequency from monthly to quarterly flights. The spacecraft recently made six successful flights to space in a six-month window.

Unity flights will be paused sometime in mid-2024 as the company shifts its resources to building the new Delta ships. The company plans to start test-flying the Delta from Spaceport America in mid-2025, according to documents that were used during the financial presentation.

The company expects that using the Delta, which has more seats for passengers and is expected to fly more regularly, will significantly increase monthly revenue, according to Virgin Galactic documents.

Spaceport America officials learned of Virgin Galactic‘s pause in space flights when the company publicly announced it, said Charlie Hurley, a spokesman for the spaceport.

The spaceport is adjacent to White Sands Missile Range, which provides 6,000 square miles of restricted airspace and has about six full-time tenants who will continue use the site for launches, he said.

It wasn‘t exactly clear how Virgin Galactic employees at the spaceport will be affected, he said. Virgin Galactic officials didn‘t provide additional details on Wednesday.

“We‘d like to recognize that‘s there‘s a human element to this,” Hurley said. “Individuals at Virgin Galactic lost their jobs. ... It‘s almost certain that families in New Mexico will be affected by this.”

He said the spaceport is hopeful Virgin Galactic will have success building the Delta spacecraft.

“Is it unexpected? Yes, it is,” Hurley said. “Our hope is that once Delta (is completed) flights will ramp up and (Virgin Galactic) can fly the 800 or so people on their waiting list to space.”

Virgin Galactic released a memo sent from Colglazier to employees in which he announced the changes and layoffs.

“I‘m writing today to share news that we will be streamlining our work outside of the Delta program, and we will be making related reductions in both staff and expenses," he wrote. “This is a difficult decision, as reductions in our workforce have direct and indirect impacts on our team, our co-workers, and our friends.”

Colglazier said in the memo that Virgin Galactic employees would be receiving phone calls through Thursday informing them of their employment status.

He said there were a variety of factors that led the company to make the significant shakeup.

“Recently, however, uncertainty has grown in the capital markets. Interest rates remain high, which adds pressure to companies who are investing today for profits that will come in the future,” he wrote. “Geopolitical unrest continues to expand, and the combination of these factors makes near-term access to capital much less favorable. We are going to succeed in this environment by focusing our full company efforts on the safe, efficient, and successful completion of our Delta program that will allow us to create positive cash flow.”