Virgin Galactic is aiming to achieve profitability with its new line of suborbital spaceplanes, the Delta-class vehicles. During an Aug. 7 earnings call, the company outlined its financial models for how these vehicles, expected to enter commercial service in 2026, will significantly impact its bottom line.
“There are lots of opinions about Virgin Galactic’s business model shared on various social channels and platforms. We find many of those opinions are missing key pieces of information,” said Michael Colglazier, chief executive of Virgin Galactic.
The company presented a video and presentation detailing the economics of flying multiple Delta-class vehicles, starting at Spaceport America in New Mexico. “After an initial ramp-up period following the launch of our first two Delta-class spaceships, we expect to have capacity to deliver approximately 125 spaceflights per year,” said Doug Ahrens, chief financial officer.
With each vehicle carrying six customers, Virgin Galactic projects flying 750 people a year at an average ticket price of $600,000, resulting in annual revenue of $450 million. The company estimates it can generate adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $95 million to $110 million a year.
Virgin Galactic also examined adding a second spaceport, potentially in Europe or the Middle East. With an additional four spaceships and two motherships at this facility, the company projects annual revenues of $1.98 billion and adjusted EBITDA of $1 billion to $1.1 billion.
These financial models rely on several assumptions, including sufficient demand for hundreds or thousands of flights per year at the specified price. Virgin Galactic cites its own research, along with studies by Credit Suisse and Jeffries Global Research, estimating a total addressable market of 300,000 people worldwide, growing at 8% annually. Currently, the company has approximately 700 customers.
The model also assumes that Virgin Galactic can build and operate the Delta-class vehicles at projected costs. The company is transitioning from designing the spaceships to manufacturing. “In the next month, our teams will begin to pivot from a primary focus on design completion to primary focus on the build and test phases of our production spaceships,” said Colglazier.
Virgin Galactic plans to perform final assembly at a new facility in Mesa, Arizona. The company acquired two buildings there in July for assembly and testing. Colglazier said Virgin expects to receive the first components from suppliers in the first half of 2025, with rollout and testing of the first vehicle in the second half of the year. “Our Delta spaceship program remains on track to deliver ships into commercial service in 2026,” he said.
Virgin Galactic recorded $4.2 million in revenue in the second quarter, primarily from the final flight of VSS Unity in June. The company had an adjusted EBITDA loss of $79 million and negative free cash flow of $114 million during the quarter. At the end of the quarter, it had $821 million in cash and equivalents on hand.