WASHINGTON — Virgin Galactic has pushed the beginning of commercial flights of its SpaceShipTwo suborbital vehicle to no earlier than the first quarter of 2021 while announcing plans to sell additional stock to raise money.
The company, in its fiscal second quarter financial results released Aug. 3, said it expected to perform two more test flights of SpaceShipTwo from Spaceport America in New Mexico, both of which will be powered flights. The vehicle has made two glide flights since moving to the spaceport early this year.
The first of those powered flights, scheduled for the fall, will have two pilots on board. It will also carry payloads for NASA’s Flight Opportunities program that arranges flights of experiments on suborbital vehicles, said George Whitesides, chief space officer and former chief executive of Virgin Galactic, in a company earnings call.
If that flight goes as expected, Virgin Galactic will then perform a second flight, this time with four mission specialists on board along with the two pilots. Those mission specialists “will evaluate the performance of our full customer cabin and associated hardware,” he said. The company unveiled the design of the cabin July 28, although Whitesides said they were still completing the installation of the cabin on the company’s current SpaceShipTwo vehicle, VSS Unity.
“Presuming things go as expected on this fully-crewed flight, we would then plan to fly Sir Richard Branson on the third powered flight from New Mexico,” he said. That flight would take place in the first quarter of 2021 and mark the beginning of commercial service, although Whitesides said it will also be a test flight of sorts. “Sir Richard is in a unique position to provide the ultimate cabin and spaceflight experience evaluation, as a visionary of the Virgin customer experience.”
The statement is an acknowledgement that the company won’t begin commercial flights this year. When Virgin Galactic announced its merger in July 2019 with Social Capital Hedosophia, a publicly traded holding company, it said it planned to begin commercial service by mid-2020. Earlier this year, the company backed away from that schedule, saying in February its goal was to fly Branson by the end of the year.
Whitesides said in the call that the coronavirus pandemic had slowed down work on SpaceShipTwo, including planning for test flights. “Our test flight schedule has been impacted by COVID-19,” he said. “The COVID protocols that we have put in place have limited the number of people that we can bring back into the facility in both New Mexico and Mojave, reducing the pace at which we can work compared to pre-COVID.”
The pandemic also slowed sales. Whitesides the company temporarily suspended marketing of its “One Small Step” initiative, where prospective customers can pay a $1,000 deposit to be first in line when the company resumes ticket sales. The company has since resumed marketing of the program has now has more than 700 people signed up, he said. Virgin Galactic has not disclosed when it plans to resume ticket sales, or what price it will charge.
Virgin Galactic announced June 22 it would start offering orbital spaceflight experiences, including working with NASA through a Space Act Agreement. Whitesides said in the call that the company has talked with its existing suborbital spaceflight customers about paying a “significant refundable deposit” for an orbital flight, and that 12 people had signed deposit agreements with the company.
Those people, he said, viewed a SpaceShipTwo flight as potential training for those orbital flights. Whitesides, though, did not disclose the size of the deposits or other details about when and how those customers would fly to orbit. The price, he said, will be “competitive with other offerings in the market, and with the premium service and training that people expect from the Virgin Galactic brand.”
Virgin Galactic reported no revenue in the second quarter of 2020 and a net loss of $63 million. That is similar to what the company reported in the first quarter, and Jon Campagna, Virgin Galactic’s chief financial officer, called it an “approximate indication of our ongoing cash burn” for current operations. The company has $360 million in cash as of the end of the second quarter.
“However, there may be some strategic initiatives that we decide to invest in that may lead to an increase in our burn rate,” he added. Earlier in the day, the company released a conceptual design for a supersonic passenger aircraft capable of carrying up to 19 people at up to Mach 3. The company didn’t disclose a schedule or estimated cost of the vehicle, but did state it has a memorandum of understanding with Rolls-Royce to study airbreathing engines needed for that vehicle.
Shortly after releasing its second quarter earnings, the company announced it had filed with the U.S. Securities and Exchange Commission to sell up to 20.5 million shares of stock, with an option to sell an additional 3 million. The company said it expected to sale to raise $460 million, and use the net proceeds “primarily for general corporate purposes, including working capital, general and administrative matters and capital expenditures.”
Virgin Galactic executives declined to take questions about the planned sale, or other aspects of the company’s performance, from industry analysts on the call, citing restrictions about company disclosures in SEC regulations regarding public offerings.