Space Tourism: The Promises of Virgin Galactic

Richard Branson’s company outlines a future with new spacecraft, thousands of customers, and hundreds of millions in revenue (ticket price: $600,000). But it won’t be flying until 2026.

BY EMILIO COZZI

Virgin Galactic will once again aim for a bright future. For now, though, it’s just hypothetical. Richard Branson’s space company has laid out its ambitions to investors, which, however, won’t materialize before 2026. Until then, there will be no flights. After that, provided forecasts hold true, a boom is expected: more tourists, more flights, new spaceports, and stellar profits in the strictest sense. These are new promises after previous ones, which were not entirely fulfilled during years that were far from thrilling.

On June 8, 2024, an important chapter in space tourism was written: when the VSS Unity of Virgin Galactic landed on the runway of Spaceport America in New Mexico, descending from an altitude of 80 kilometers, it wasn’t just the end of a mission; it was a (first) milestone. The spacecraft that first made it possible to imagine space travel at a high but not millionaire price, allowing passengers to view Earth from an inspiring altitude and experience what astronauts feel in orbit for a few minutes, will no longer fly. The next Virgin space tourists will take off aboard the new Delta Spaceship, a detailed project that is still on paper.

Space Tourism, First Chapter

Let’s take a step back: Virgin Galactic, the company founded in 2004 by the British magnate of Virgin, Richard Branson, is one of two companies offering “all-inclusive” space trips, from organization to transportation. The other is Blue Origin, founded by Amazon’s Jeff Bezos. They have two different approaches: Blue Origin takes passengers beyond 100 kilometers in altitude with a vertical “hop” (the internationally recognized boundary of space), ascending in a capsule atop a rocket (the New Shepard) and descending with the aid of parachutes.

Virgin Galactic’s offering, on the other hand, is a journey to the edge of the atmosphere. The VSS Unity, carrying crew and customers, is transported by White Knight Two—its mothership—which takes off like a conventional airplane. Upon reaching an altitude of about 14 kilometers, the VSS Unity detaches and ignites its rocket to soar toward the sky, reaching an altitude above 50 miles (over 80 kilometers, not enough to reach internationally recognized space, but sufficient to cross the American space boundary of 80 kilometers). Once it reaches the maximum altitude, VSS Unity shuts off its engine, and passengers unbuckle their seatbelts to enjoy four to six minutes of weightlessness. The return is similar to the Space Shuttle’s, with a glide and landing on the spaceport’s runway. It’s a complex and risky system that relies heavily on aerodynamic flight: in 2014, during a test, co-pilot Michael Alsbury lost his life.

With this setup, a total of 12 successful flights have been completed. Of those, only seven met commercial demands and carried paying passengers. All of these flights were conducted in less than a year, from June 23, 2023, to June 8, 2024. The first commercial mission in early 2023 carried four Italians: Virgin Galactic pilot Nicola Pecile, Air Force Colonel Walter Villadei, and CNR researchers Angelo Landolfi and Pantaleone Carlucci. This demonstrates that suborbital flights, which “touch” space without completing a full orbit, are not just for thrill-seeking millionaires but also provide opportunities to conduct scientific and technological experiments.

Unfulfilled Promises

Now, after the seventh operational flight, VSS Unity will be retired and replaced by the Delta Spaceship. Although it appears similar to VSS Unity, the Delta Spaceship will be able to carry up to six paying passengers and fly more frequently. This is the cornerstone of Virgin Galactic’s relaunch plan, which produced disappointing numbers in the last quarter: with revenues of $4.2 million, it recorded an adjusted EBITDA loss of $79 million (a measure simplified as operating margin: earnings before interest, taxes, depreciation, and amortization). Despite a solid cash position of $821 million in available liquidity, it is a business that isn’t working.

It’s no surprise that the market has lost faith long ago: the stock is at historic lows, around $6 per share. It’s a chasm compared to the $200 at its debut on the New York Stock Exchange in 2019 and an abyss from the peaks of over $1,100 per share during the height of excitement for space tourism.

The current reality reflects unfulfilled expectations in a sector still waiting to be conquered. The days when Virgin Galactic claimed to have over 600 reservations (with names like Leonardo DiCaprio and Justin Bieber mentioned) for a total of about $80 million in deposits and over $120 million in “potential revenues” seem distant. So far, only about twenty paying customers have been satisfied, and the real turning point, if it comes, is expected in 2026. In the meantime, Bell Textron and Qarbon Aerospace will be tasked with producing the components of the Delta Spaceship, which must be delivered by the first half of 2025 and then assembled at the new Mesa facility near Phoenix, Arizona. The first tests are expected by the end of next year.

Looking Ahead, New Promises

During the presentation of its financial results for the second quarter of 2024, Virgin Galactic aimed far and took a running start: it unveiled more numbers and new promises. The Delta Spaceship, the company claims, will ensure more frequent flights, with a pace allowing up to 125 missions each year. With six paying passengers per trip, resulting in 750 tickets sold at $600,000 each, potential revenues are estimated at $450 million. This assumes one mothership and two Deltas in rotation. With two motherships and four spacecraft, the numbers could double to nearly a billion dollars in annual revenue and even quadruple EBITDA.

Further down the line, the company suggests in its report and a very inspiring video that new spaceports could be built beyond the one in New Mexico, potentially doubling the numbers and operating margins again. However, it will take at least four or five years, according to Virgin executives. It’s important to note that all forecasts and simulations assume a sufficient commercial demand. This translates to thousands of customers each year (likely millionaires, given the cost of a 90-minute experience).

At least for the next two years, it’s certain that Virgin Galactic won’t be taking to the skies. And that the Delta Spaceship is yet to be born.