Profit, Loss, and the Delta Between

Virgin Galactic, the spaceflight subsidiary of Sir Richard Branson’s British Virgin Group, has announced its 2022 second quarter financial results—and the news is mixed.

Virgin Galactic CEO Michael Colglazier states: “As we prepare to return to the skies, we have put in place many powerful initiatives to drive our long-term success. Our agreement with Aurora to develop new motherships, selection of Phoenix as the location for our new Spaceship factory in Phoenix, and acquisition of an incredible land parcel in New Mexico for our Future Astronaut Campus are cornerstone elements of how we will build and operate our global Spaceline. While our short-term plans now call for commercial service to launch in the second quarter of 2023, progress on our future fleet continues and many of the key elements of our roadmap are now in place to scale the business in a meaningful way.”

Mister Colglazier’s cheeky optimism doesn’t much blunt the agonies of Virgin Galactic investors who’ve watched the company lose a cool $1-billion over the last two years.

Currently, Virgin Galactic’s cash, cash-equivalents, and marketable securities play to the tune of $1.1-billion—against losses of $111-million (compared to a $94-million net loss during the same time period last year). Since June 2021, the company’s administrative expenses have increased by approximately 22%, while its research & development expenditures have increased by around 77%.  Virgin Galactic’s 2022 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) totaled $93-million compared to $56-million in the second quarter of 2021. Free cash flow and cash paid for capital expenditures rose respectively to $91-million and $5-million over 2021 figures of $66-million and $1-million.

Considered from perspectives other than those of Branson’s accountants, Virgin Galactic hasn’t had an altogether terrible 2022. Sir Richard’s builders and boffins have undertaken the construction of a spaceship manufacturing facility, seen to the commissioning of two new motherships, and partnered with luxury travel outfit Virtuoso, which plans to offer and promote Virgin Galactic space-flights to its upscale clientele.

A trip to the edge of space aboard one of Virgin Galactic’s Delta Class spacecraft is slated to sell for $250,000. Viewed against the backdrop of Southwest’s or JetBlue’s going rates, the figure seems steep. Compared, however, to Blue Origin’s $28-million seat price, and the $55-million SpaceX charges for passage to the ISS aboard its Crew Dragon, Virgin Galactic’s asking price is practically bus-fare.

Purpose and pocket-depth notwithstanding, spacefaring is a speculative, capital-intensive crapshoot. Formerly the sole province of superpowers, Earth-orbit and the vastness beyond are now the dueling-grounds of billionaires and multinational conglomerates. What Gagarin, Shepard, and Armstrong conquered, Musk, Bezos, and Branson have commercialized; and as the former risked their lives, the latter now risk their fortunes. Whether or not Virgin Galactic actualizes its vision of making space accessible to the well-scrubbed masses remains to be seen. What can be stated with certainty, however, is that vision and the willingness to risk are, at once, the beginnings of progress, and the hallmarks of greatness.  

FMI: www.virgingalactic.com