Virgin Galactic stock craters after commercial flights are delayed
By Walé Azeez, CNN Business
Virgin Galactic has pushed back the start of full commercial service to the fourth quarter of next year, sending shares in the space tourism company founded by billionaire Richard Branson down sharply.
The stock dropped 14% in early trading on Friday after Virgin Galactic said it was making schedule changes that would delay a crucial test flight and the start of commercial services, which had been expected to commence late in the third quarter of 2022.
Virgin Galactic said it would focus on an “enhancement program” to improve the performance of its rocket-powered plane VSS Unity and the mother ship from which it launches. It will also carry out physical inspections after a lab test “flagged a possible reduction in the strength margins of certain materials.”
“While this new lab test data has had no impact on the vehicles, our test flight protocols have clearly defined strength margins, and further analysis will assess whether any additional work is required to keep them at or above established levels,” the company said in a statement.
The company said that a test flight, Unity 23, that had been expected as early as this month will also be delayed. The flight will carry three paying crew members from the Italian Air Force and the country’s National Research Council.
“Our decisions are driven by detailed and thorough analysis, and we fly based on the most accurate and comprehensive data available,” Virgin Galactic CEO Michael Colglazier said in a statement.
“The re-sequencing of our enhancement period and the Unity 23 flight underscores our safety-first procedures, provides the most efficient path to commercial service, and is the right approach for our business and our customers,” he added.
Virgin Galactic said the delays are not related to its recent probe into a potential defect in a supplier component. It said that issue has been resolved.
Branson became the first person to ride into space aboard a rocket they helped fund in July, traveling with three fellow crew members. He was followed into space days later by fellow billionaire and Amazon founder Jeff Bezos. SpaceX, which was founded by Tesla CEO Elon Musk, is also competing in the space race.
Branson’s flight, Unity 22, was investigated by the US Federal Aviation Administration (FAA) for deviating from its assigned flight path. Virgin Galactic said in September that it had been cleared to fly again after the regulator accepted its “corrective actions.”
More than 600 people — who purchased tickets for between $200,000 and $250,000 when Virgin Galactic sold its first batch of tickets nearly a decade ago — are already on the waiting list for a flight.
Virgin Galactic has been in the red every quarter since it went public in 2019, though executives are hoping to turn that around as it moves from its testing program into normal operations. The company said in August that it was reopening ticket sales at a base price of $450,000.
— Jackie Wattles contributed reporting.
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