Investing in Space: Virgin Galactic enters spaceflight hiatus after retiring Unity

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VSS Unity was a good suborbital spaceship. But Virgin Galactic needs a great suborbital spaceship.

As Unity heads into retirement after last weekend's launch, it's worth looking at the vehicle's final tally: 12 spaceflights over six years, carrying 37 people to space.

Those are solid numbers for a privately-developed spacecraft. But it's a far cry from the forecast Virgin Galactic sold investors on – more than 3,000 "cumulative passengers flown" by 2023 –

when it went public five years ago.

Virgin Galactic's leadership has clearly known for a while that it would need a more robust, efficient solution than the company's SpaceShipTwo and SpaceShipThree classes of vehicles. 

Three years ago, when CEO Michael Colglazier first told me about the company's plan for the "Delta" class, the plan was for Unity to have two successors, VSS Imagine and VSS Inspire, before

making the jump to Delta vehicles. 

VSS Unity will fly no more. And Virgin Galactic says VSS Imagine and VSS Inspire will never fly, instead being used for development and testing of its Delta class on the ground.

"Our Delta class ships are powerful economic engines. Because of their breakthrough capacity and revenue generation, we are choosing to leapfrog past our third-generation ship, VSS Imagine,

and move directly to our fourth generation, the Delta Class," Colglazier said on an earnings call last year.

But that leaves a hiatus before the first Delta spacecraft debuts, with the key target of a first commercial flight in 2026.

As a reminder, human spacecraft development is often years delayed, and Virgin Galactic has in the past been no exception: Virgin Galactic was supposed to begin spaceflights in 2010, but

didn't until 2018. And after it went public, the company's commercial flights were supposed to begin in early 2020 but didn't until June 2023.

The company's on a ticking cash clock, too. It had nearly $870 million in cash and equivalents on hand as of March, while burning about $1 billion of negative free cash flow over the last

two years. 

That's a staggering rate and – taking the company's track record and the broader history of human spaceflight vehicle development into account – Virgin Galactic should spend at least another

$1 billion before a Delta spacecraft starts flying passengers. 

The company's already taking belt-tightening measures, such as layoffs late last year and a reverse stock split this week to get its stock back above $1 a share after a steady slide over the

last three years.

Virgin Galactic's future in space is then suspended on the edge of this question, which is not about the debut of Delta but the cadence: Can the company get its first Delta spaceship, within

its first year or two, flying at a pace 10 times more frequent than Unity?

Even if Virgin Galactic reaps higher revenue per flight with Delta – with plans for six passengers per flight at $600,000 a seat, netting $3.6 million per trip – the company needs that

future spacecraft flying weekly, not quarterly or even monthly, and soon.

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