Philip Georgiadis and Peggy Hollinger, Financial Times – Dec 2, 2023 6:58 pm UTC
Welcome, Virgin Galactic creator Richard Branson!
Eric Berger
Sir Richard Branson has announced that he will not be investing more money into Virgin Galactic, his lossmaking space travel company, amidst his organization empire not longer having the deepest pockets that it once held.
Virgin Galactic, established by Branson in 2004, recently revealed cost-cutting measures and a suspension of commercial flights for the next 18 months, in a strategic move to secure funding for the development of a larger aircraft. This aircraft will be able to carry passengers to the edge of space.
It was stated that the group has adequate funding to sustain it until 2026 when the larger Delta vehicle is expected to enter into service. However, experts speculate that Galactic may need to seek additional funding around 2025.
Being asked if he would consider investing more money into the business if needed, Branson told the Financial Times, “We don’t have the deepest pockets after Covid, and Virgin Galactic has got $ 1 billion, but nearly. It should, I think, have enough funds to do its job by itself.”
Despite the financial difficulties, Branson maintained that he remains passionate about the Virgin Galactic project. He emphasized that the technological innovation for commercial space flight has been substantial. Galactic recently completed its sixth commercial flight in six months, with tickets starting at $450,000 per seat on its rocket-powered Unity space plane.
Virgin Group remains one of Galactic’s major investors, even after selling over $1 billion worth of shares in 2020 and 2021, reducing its stake to 7.7 percent. The proceeds from the share sales were used to secure other parts of its broad leisure and travel business during the pandemic.
Branson’s rocket start-up, Virgin Orbit, faced a set-back eight months ago after a failed launch from the UK. Due to its UK mission experiencing repeated delays, the start-up, in which Branson holds a 75 percent stake, ran out of funds.
Experts suggested that Galactic had learned from the mistakes of Orbit, and was not ready to invest its entire capital on loss-making flights. “This business is designed to be run at scale, and by having flights on just the Unity, it was clear that it wouldn’t reach the scale needed to cover its costs,” said Greg Konrad, an analyst at investment bank Jefferies. The Delta, expected to carry six passengers compared to Unity’s four, will operate more frequently.
Despite not making a profit yet, Galactic was valued at $2.3 billion when it went public on the New York Stock Exchange in 2019. Since the close of trading on Friday, the company is now valued at $935 million.
Branson, who has spent years cultivating the public image of his company with high-profile experiences and stunts, stated that he now spends 90 percent of his time on humanitarian work. However, he added that there is still “a lot happening” at Virgin Group.
