Virgin Galactic (SPCE) Q3 earnings report

Virgin Galactic announced Wednesday that it plans to pause spaceflight operations next year to focus resources on developing the next generation of its Delta-class spacecraft.

Although Virgin Galactic has been flying commercial missions at a monthly rate since June, the space tourism company will reduce the rate at which its VSS Unity spacecraft flies to a quarter, before pausing “in mid-2024” to focus resources on final assembly of the new vehicles. Delta Ships said in its third-quarter results.

Virgin Galactic laid off about 185 employees on Tuesday, or about 18% of its workforce, to “reduce its costs and strategically realign its resources.” This brings Virgin Galactic’s total headcount to 840 employees and is expected to achieve annual cost savings of approximately $25 million.

The space tourism company reported a net loss of $104.6 million, or 28 cents per share, compared with an expected loss of 43 cents per share, according to analysts surveyed by LSEG, formerly known as Refinitiv.

Virgin Galactic had revenue of $1.7 million during the quarter, compared to $767,000 a year earlier. Earlier this month, Virgin Galactic completed its fifth commercial spaceflight.

Virgin Galactic stock rose 8% in after-hours trading from closing at $1.56 per share. The stock is down 55% year to date.

Virgin Galactic had cash and securities totaling $1.1 billion at the end of the quarter.

The company is spending heavily to expand its fleet beyond the current VSS Unity spacecraft. Virgin Galactic is advancing its Delta class spacecraft at an improving weekly rate. The company aims to open a new factory by mid-2024 in Phoenix to produce Delta.

“We expect to have sufficient capital to bring the first two Delta ships into service and achieve positive cash flow in 2026,” Virgin Galactic CEO Michael Colglazier said in a statement.