Virgin Galactic just flew again, but is the company going anywhere?

SPACEPORT AMERICA, New Mexico—I'm standing on a spaceport runway at the ass end of nowhere. The sun has started to creep over the craggy San Andreas Mountains, illuminating the massive, alien spaceship-like building here in New Mexico that Virgin Galactic calls home.

I have traveled all this way in early August to find a little illumination of my own. In particular, I want to know just what the heck Virgin Galactic is up to. Founded by Sir Richard Branson some 19 years ago, the company has had a wild ride in its quest to become the world's first bona fide space tourism business. Along the way, Virgin Galactic's stock soared as high as $56 a share, then crashed to now barely above $3. One of its spaceships crashed, too, nearly nine years ago, killing a test pilot. But now it's moving forward in a positive direction.

Later on Thursday morning, with a stunning rocket blast initiated about 14 km above the New Mexico desert, the company completed its seventh flight to an altitude of 88 km, above the vast majority of Earth's atmosphere. Most of the previous missions were test flights to push the envelope of the VSS Unity spacecraft's capabilities. Thursday's flight, dubbed Galactic 02, was actually the first time the company flew a private astronaut into space—and this is the reason Virgin Galactic exists, after all.

More than 1,000 people have bought tickets for the Virgin Galactic experience, which includes a few minutes of weightlessness after a one-minute rocket ride to the top of the world. The first several hundred paid $250,000 for their tickets more than 15 years ago, with the expectation of starting flights around 2010. One of them was on board the space plane Thursday.

This was Jon Goodwin, a British businessman who recently turned 80 years old. Goodwin purchased his ticket all the way back in 2005. He was just the fourth person to do so. But he has Parkinson's' disease and is running out of time. He knows it.

"The fact that I am now able to do this is completely magical," he said. "Defying Parkinson's is hopefully inspirational."

He was joined on the flight by Keisha Schahaff and Anastatia Mayers, a Caribbean mother-daughter duo whose tickets were purchased by the nonprofit Space for Humanity in order to broaden access to space. So with this single mission, Virgin Galactic really did, at long last, start to fulfill its goals of broadening access to space.

It was a moment. But will it be a fleeting moment? What does Thursday's successful flight actually mean? Does Virgin Galactic have a successful future? I came to New Mexico to find out.

Challenging financials

Let's start with the financials for Virgin Galactic, which became a publicly traded company in 2019. In its latest financial statement, through the second quarter of this year, the company reported a robust $980 million cash on hand. It has also demonstrated the ability to raise additional funding.

Even so, the company's burn rate is rather high. Virgin Galactic reported a quarterly loss of $134 million. Some of that is due to investments in developing a future line of spaceships, but the company also has 1,100 employees, so a majority of the expenditures are on its headcount in New Mexico and California. Very roughly, this means that without additional funding, Virgin Galactic will run out of money in less than two years.

This basic math is unlikely to change in the near future. While Virgin Galactic has started flying into space every four to six weeks or so, it won't make a substantial amount of money any time soon. Each of these flights only carries three paying customers, plus a representative of the company in the cabin. Since a chunk of the spacecraft's partially reusable engine must be replaced after every flight, these missions are operating at a loss.

So why is Virgin Galactic flying at all? Because it wants to show the world what it can do, reassure investors of its technical capability, and show off the experience it can offer customers. Also, the company does have a plan to reach profitability. The problem with this plan is that Virgin Galactic must survive at least the next three years, and probably longer, before it starts generating a lot of cash.

That is a long "valley of death" for any company to walk through.

Finally, a cadence of sorts

In July 2021, Virgin Galactic flew its first fully crewed spaceflight, including Branson among its passengers. This felt like a hopeful moment for the company, but the spacecraft did not fly again that year. Or in 2022. Why? Virgin Galactic said it was standing down for a program to upgrade VSS Unity and its aging carrier aircraft, VMS Eve. Virgin Galactic, in fact, would not fly again until a spaceflight on May 25, 2023—a nearly two-year gap.

Ahead of this week's flight, I toured Virgin Galactic's facilities in Southern New Mexico. One of the guides was the company's president, an engineer named Mike Moses. He is one of the people who inspires confidence in Virgin Galactic. Moses worked at NASA for decades, including as a flight director, and he later chaired mission management teams for the final space shuttle flights. You have to be an all-star to get those assignments.

After the shuttle stopped flying in 2011, Moses wanted to remain in the human spaceflight business, so he came to Virgin Galactic to run its operations. After test flights in 2018 and 2019, he said, it was clear that Virgin Galactic needed to optimize Unity and Eve for more frequent flights.

“The physical modifications to the ship were meant to basically decrease the amount of time needed to look at things after every single flight," Moses said. "We’re increasing the robustness of some of that hardware.”

The idea was that, instead of having to look at every nook and cranny after every flight, a truly time-consuming process, engineers should do what they could to reduce the need for these intrusive inspections. And it seems to be working, Moses said. The company has flown in May, June, and now, at the beginning of August. It is approaching a monthly spaceflight cadence.

The first two launches after the modifications were clean and so far are validating the decisions made by engineers. For example, Moses spoke about a part on the carrier aircraft, Eve, that moves during flights. Previously, every time this part flew, it cracked due to this movement.

"We were over-constraining it," Moses said. “It wasn’t a structural problem, it was an aerodynamic fairing to keep the airflow, but it kept breaking. We redesigned it to have a little slip joint, so it just moves every time. And it’s been working awesome. So we’re seeing really great results from the mods.”

Selling an experience

Virgin Galactic has a superior experience to sell. A ticket is very far from being affordable for most, but the service is definitely luxurious. There are many fine details in the three days of preparation for the spaceflight.

For example, when customers first arrive at the sprawling spaceport in New Mexico, they walk into a tunnel at the front of the building. It is fairly closed-in until some large windows that reveal the production floor three stories below. The overhead view of the shiny spacecraft, mated to its carrier aircraft, is arresting. I've seen a lot of cool things in spaceflight, and this was right up there. Sorry, we weren't allowed to take pictures.

Prospective astronauts—let's dispense with the debate about whether space tourists are astronauts; if you strap yourself to a rocket and blast above the atmosphere, it counts—spend most of their three days in New Mexico on the third floor of the main building. This facility, named "Astra," is where they train and relax before their flight. There is a full-size version of the spacecraft there in which to get acquainted and familiarize oneself with the flight experience.

Virgin passengers take off from a runway like an airplane, and after their spacecraft is released and rockets to space, it lands like a glider. This is a distinctly different experience from that of Virgin's competitor, Blue Origin. Passengers on board Blue Origin's vehicle take off on a traditional rocket and land underneath parachutes inside a capsule.

So far, there has been far more demand for both Virgin Galactic and Blue Origin's suborbital space tourism services than capacity. While Blue Origin has flown half a dozen missions with private astronauts, it experienced an accident during an uncrewed flight of its New Shepard system last September. New Shepard has not flown since. And even before the accident, Blue Origin tickets were about twice the price of Virgin Galactic's.

So the name of the game is execution. Who can fly often and fly safely?

The challenge of flying often

Virgin Galactic has just a single spacecraft, Unity, and carrier aircraft, Eve, in its fleet. In the spring of 2021, the company rolled out a second vehicle, Imagine, and said testing could begin later in the summer. Officials also said they had just started building a third spacecraft, Inspire.

More than two years later, Imagine is nowhere to be seen. And no one talks about Inspire any more. Virgin Galactic says it has put Imagine on hold while working toward commercial spaceflights. Will it ever fly? Increasingly, the answer sounds like no. "It's mostly done," Moses said. But asked whether it will actually fly, he said, "We're still debating it."

Simply put, Virgin Galactic has limited resources and prefers that its engineers work on a new generation of the spacecraft, called the "Delta-class." These ships are the key to profitability.

"We have a new fleet of ships coming out," Moses said, speaking with Unity and Eve in the background. "They’re going to look much like these. But the idea is that we want to make them more manufacturable, cheaper, and easier to make, and more maintainable so we can turn them around faster. Unity and Eve require a lot of intensive labor to check them out between flights. The new Delta class will be designed for much cheaper operations, and then the new motherships will be the same way."

Virgin has bet its future on the Delta ships. They will carry six passengers, not four, and are intended to fly once a week. With a fleet of them, Virgin aspires to fly 400 times a year, allowing it to reach profitability. Moses makes a good point about the ships. They're based on the same design as Unity, and will fly the same profile. Their testing should be shorter, because Virgin Galactic will be starting with a lot of data already.

That's great, but the Delta ships remain in the design phase. Construction will not begin before at least the second half of next year, with testing beginning in late 2025, perhaps. That puts the Delta ships into commercial service no earlier than late 2026—and let's be real, every major spaceflight project undergoes significant delays.

So it's possible that when it comes to an operational fleet, VSS Unity is it for the next three or four years, at least.

The company must also find the resources to build additional carrier aircraft, as VMS Eve is now 15 years old. The company's current hangar can accommodate a handful of ships, so it will also need even larger facilities to handle more spacecraft. These are all major investments for a company that lacks substantial revenue.

Putting it all together

So will Virgin Galactic make it? I would like to think so. Alongside Blue Origin and its New Shepard spacecraft, it has brought a new capability to the market. After sitting through a simulation of the experience, there is no doubt it's a huge thrill.

And it would be awesome for thousands of people to have that experience and share it with the world. Leaving the planet, even briefly, is for most people an affirmation that we ought to be doing everything we can to protect this world and its razor-thin atmosphere. Expanding access to space is one way in which the era of commercial space spreads its wings. I'm thrilled someone is out there giving it a full-on go.

But I don't know, man. It takes years to develop space hardware, and Virgin Galactic is promising a lot of upgrades with the Delta-class spaceships. If those ships under-deliver, it's ballgame. If the upgrades are delayed a few years, the company is likewise toast. And if there are some fatal accidents, well, it ends badly. So there are a lot of hills to climb.

I will say this: Reaching a near-monthly cadence with VSS Unity this summer builds credibility. So I think there's a chance. I don't know how big of a chance, but I'm eager to find out.