Virgin Galactic lays off 18% of its workforce and pausing flights to focus on next-gen vehicle

Virgin Galactic announced this week it laid off about 185 employees, 18% of its workforce, to better streamline the development of its Delta-class spaceplane. The company also announced during its earnings call that it will begin to slow its flights down before pausing them all together.

Virgin Galactic to go all in on Delta-class spaceplanes

On Tuesday, Virgin Galactic announced that the company would layoff some 185 employees from its workforce as it refocused on finishing up development on its Delta-class spaceplane. They came a day before the company planned on releasing its Q3 earnings after having a rather impressive start to commercial flights this year.

Right now, Virgin Galactic has one spaceplane capable of commercial operation, VSS Unity. The company also only has one mothership, the aircraft that carries Unity to altitude before dropping it to light its engine, which is called VMS Eve. With those two vehicles, Virgin Galactic can only launch about once a month.

That cadence is far better than what its competitor, Blue Origin, has ever been able to do. However, that won’t cut it to make the company profitable.

Virgin Galactic has been working on what they’re calling its “Delta-class” of spaceplanes for a few years now. The company actually announced VSS Imagine and what they called SpaceShip III back in 2021 but that aircraft has seemingly disappeared. We don’t know much about these new spaceplanes other than they are supposed to help make the company profitable.

Virgin Galactic CEO Michael Colglazier actually stated that the Delta-class should make the company become profitable by 2026. It will do this by flying weekly rather than monthly while being more cost effective.

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Pause in flight operations

After flying for six months in a row, Virgin Galactic is choosing to end that streak and move towards pausing its flights by mid-2024. VSS Unity will move to flying once a quarter before being grounded next year to wait for the first Delta spaceplane to be finished.

Delta’s new motherships, being built by Boeing, are expected to enter service in 2025 and that’s also when Virgin Galactic hopes to finish up its first Delta spaceplane. The pause will be another way the company will focus on getting those new vehicles out of development.

Will Virgin Galactic hold its own?

Pausing of the only operation that is expected to bring in revenue before the company is even close to making a profit is rather concerning. However it’s far from anything similar to something like Astra dropping Rocket 3 for Rocket 4 development.

Virgin Galactic shared in its Q3 earnings that it has $1.1 billion of cash on hand. Enough for it to get through building its first two Delta spaceplanes.

In those earnings, the company also shared that it loss roughly $101 million and brought in $1.7 million in revenue. Obviously, launching once a month was not even close to helping the company break even.

With these layoffs, Virgin Galactic expects to save $25 million from its annual cost to continue operating.

I’ll have to echo the similar statement my colleague Eric Berger from Ars Technica made, that while layoffs are always terrible, for Virgin Galactic it was necessary in order to survive.