Virgin Galactic says it’s committed to NM economy, despite flight pause

Virgin Galactic decided to make a change in plans. The space tourism company’s stock is dipping, and it has hundreds of customers who have waited over half a decade to go to space.

The company this month retired its SpaceShipTwo-class rocket, Unity, to focus on making its new Delta Class ships, which the spaceflight business hopes will generate more revenue.

“One chapter is closing, but the next one is going to be huge,” Spaceline President Mike Moses said.

As a result, the New Mexico-located Spaceport America won’t see any more commercial launches from Virgin Galactic, its largest tenant, until at least 2026.

While Virgin Galactic officials say work will still be happening at the New Mexico facility, the economic impact of the commercial flight pause in the state remains to be seen. Spaceport America will see a decrease in revenue until launches start again.

“Anything we can do to lift the space economy here in New Mexico, we’re definitely committed to,” Moses said.

The transition

In the first quarter of 2024, Virgin Galactic reported $2 million in revenue and a net loss of $102 million. The company reported $126 million in free cash flow, and $867 million in cash, cash equivalents and marketable securities.

The on-hand cash will go toward building a new class of spaceships: the Delta Class. Moses, at a Spaceport media tour earlier this month, described the new rockets as the “next version of our spaceship.”

He said the Delta ships will be able to fly twice a week, equating to 125 flights per year and 750 people in space.

Virgin Galactic spokesperson Aleanna Crane said that’s more people in one year than have ever gone to space before.

With the transition to the Delta Class came the early retirement of Virgin Galactic’s Unity spaceship. The company stopped its flights two years earlier than planned.

Moses said the change in plans was mainly for economic reasons, allowing the Unity workforce to transfer to the creation of the Delta ships to get operations running sooner.

He said Virgin Galactic had been planning to make more spaceships and motherships and the market was rewarding high-growth planning, but national and international factors — a possible recession and Russia’s invasion of Ukraine — forced the company to start conserving expenses.

“It was a business decision that we made in response to market forces,” Moses said. “It was not our plan, right? Obviously, we’d like to keep flying and not have a gap in operations, but that was the hard choice we had to make.”

Unity also could only fly once a month, so revenue naturally would be less than Delta.

New Mexico State University economics professor Chris Erickson works on economic studies for Virgin Galactic. He told the Journal if Virgin Galactic can build up the increased cadence with Delta, that would be “a substantial engine for growth” of the economy.

“It would be worth the wait to get to that, if they can do this all in two years,” he said.

Virgin Galactic’s stock has been on a downward trajectory for the past three years, falling about 78% over the past year alone.

Erickson described the stocks as a “little bit of a roller coaster lately.” He said it’s hard to measure success with the stock price because of the technical engineering that goes into a company like Virgin Galactic.

“I actually am one of those people that believes the stock market is not something that’s very reliable for indicating these sorts of things,” he said.

Moses said Virgin Galactic is in great shape for its transition and has cash on hand to support it.

“So while our stock price is getting punched in the knees, it doesn’t matter much, because we’ve got cash in the bank, right?” he said. “So obviously we kind of care about the stock price, but it’s not driving our ability to execute this program.”

Virgin Galactic laid off 185 employees, including 73 people working in New Mexico, in November 2023 when the company announced its pause of commercial spaceflights .

Moses said Virgin Galactic will need a much bigger workforce with the Delta ships than what it had for Unity. Test flights will start near the end of 2025, he said, and the company will staff up before that.

“While it sounds like we’re walking away from flying for a very long time, the dates on those calendars are way closer than they appear, right?” he said. “So we’ve got to start pivoting and reacting quickly (while) along the way, being very cautious about our cash. We don’t want to overspend and run into trouble.”

Moses said the Delta ships look the same but are designed differently.

The ships will have six passenger seats, which is two more than Unity. Moses said vehicle capacity is the main economic driver for the company. At increased ticket prices of $600,000 a seat, each flight would generate $3.6 million in revenue, according to Virgin Galactic.

“The economics really pay off,” Moses said.

More than 700 people have tickets to fly to space with Virgin Galactic, Moses said, despite the company not having sold tickets for at least five years. The more frequently flying Delta ships will help lessen that backlog, he said.

The company will likely reopen ticket sales in late 2025 with test flights, he said.

“A single ship flying by itself doesn’t really kind of demonstrate those market economics, but once the fleet’s there, I think we’ll see those economics start to kind of turn that around,” he said.

Virgin Galactic Founder Sir Richard Branson said as his company builds more Delta Class ships, prices will eventually lower.

“What we want to do is enable many people to experience what our astronauts experienced today,” he said earlier this month at Spaceport America after Unity’s final launch.

Moses said Virgin Galactic eventually wants to make two or three Delta ships, though the company will start with one.

How will Spaceport America be affected?

The New Mexico Spaceport Authority runs the 18,000-acre Spaceport America that includes a vertical launch area, a horizontal launch area and an advanced technology area. Virgin Galactic is the “anchor tenant” at Spaceport.

Scott McLaughlin is the executive director of Spaceport America. He said, at the Spaceport tour this month, a partnership between Virgin Galactic and New Mexico leadership, specifically former Gov. Bill Richardson, was a significant push in the Spaceport’s creation and is a driver for economic development in what he called the Space Valley.

“There’s actually a lot of aerospace things that are going on in this region,” he said. “And this is becoming foundational that you can design in the area, you can manufacture in the area, but you can also come and fly to space right here in this area.”

The Spaceport has other tenants and customers besides Virgin Galactic, including other technological space research ventures, but McLaughlin said the partnership with Virgin Galactic is really foundational.

“The Virgin Galactic launches are the most important and the biggest things we do,” McLaughlin said.

Spaceport spokesperson Charles Hurley said via email Spaceport America will have a decrease in activity and revenue during Virgin Galactic’s flight pause. However, he said, in a year, the Spaceport expects total revenues from Virgin Galactic to be greater than the present.

He added that the Spaceport has other organizations and takes a “proactive approach to identifying and communicating with aerospace and space companies” in attracting new organizations.

Erickson said the Spaceport could find contractors to substitute for Virgin Galactic in the company’s flight pause because the space market “is very strong right now.”

“It would be better if Virgin Galactic were there because then you’d have Virgin Galactic and the new clients. But I don’t see it as dramatically decreasing activity at the Spaceport,” he said.

Moses said the Virgin Galactic team will keep doing work on the mothership Eve, which resides at the Spaceport. He said the spaceship Unity will also stay there for training purposes.

“We’re not going anywhere, even though Unity is going to stop flying,” he said. “The team’s still based here. I still live here. Everybody’s still here. We’ll still be out at Spaceport every day.”

Virgin Galactic signed a letter of intent with the Spaceport to break ground on a new launch hanger. The current hanger wouldn’t have the capacity to hold additional spaceships and motherships.

The company will sign a lease and pay rent for the new hangar. Moses said Virgin Galactic wants to break ground by the end of this year and have the hangar operational in early 2026.

“There will still be a fairly large footprint here at Spaceport America, even though there’s no space flights occurring regularly,” Moses said.

Eventually, the plan is to have two motherships and five spaceships at the Spaceport, Moses said.

“So again, no spaceships flying, but a lot of expansion activity occurring right here at Spaceport America,” he said, “as well as around the rest of the state, supporting what we need to do to scale up to bring in the customers for (an increased) flight rate.”

It cost about $220 million to build Spaceport America, according to the spaceport, with $76 million from New Mexico taxpayers and $142 million from the state.

An economic report from NMSU’s Arrowhead Center, sponsored by the New Mexico Spaceport Authority, showed Spaceport America, in 2022, generated $138 million in economic output and $12.9 million in taxes as well as 811 total jobs.

Erickson, who worked on the study, said he’s heard skepticism from state legislators about the report and the Spaceport’s benefit.

“This report was done using standard methodology. We were very careful in what we did,” he said. “And we found substantial economic benefit from the continuing operations at Spaceport America.”

He said NMSU and state partners will be doing another study this year.

McLaughlin said Spaceport America has 30 full-time employees and another 35 workers who are equivalent to full-time status. He said the Spaceport also supplies security, which includes its fire department and emergency medical services.

When the Delta Class ships are ready to fly, McLaughlin said the Spaceport will have more staff to support the increased operations.

McLaughlin said in two or three years, the state will have 2,000 to 3,000 jobs as a result of the Spaceport. He said Las Cruces will need to bump up its hotel industry to sustain all the people, both workers and Virgin Galactic customers, coming to New Mexico.

Erickson said Las Cruces has lots of hotels but perhaps not the higher-end hotels Virgin Galactic customers are seeking.

“Of course, the big economic boost from space tourism is people coming for the event and staying in local hotels and things like that, and so those impacts are lost if you don’t have Virgin Galactic there,” he said. “But at the same time, (the Spaceport) will get people; they do have clients, and I’m pretty sure they will be able to find more clients.”