Virgin Galactic (NYSE:SPCE), an aerospace company focused on suborbital spaceflight for space tourists, published Q2 earnings last week. While the company’s financials are not very relevant yet, given that it has yet to begin commercial operations, there have been a couple of noteworthy developments in recent weeks.

Space Tourism Updates

The company indicated that it could begin commercial service of its spaceflight by early 2021, flying its founder Richard Branson. While this is behind the company’s previous 2020 timeline, the delay was largely expected due to the Covid-19 related disruption. The company continues to test its space flights and noted that it had now cleared 27 out of 29 Federal Aviation Administration milestones. The FAA clearance is key to receiving final approval to begin flights with commercial customers.

New Projects

The company also provided updates on some new projects. The company is working with Rolls-Royce to develop a supersonic aircraft that would be able to carry between 9 to 19 passengers, capable of traveling at about 3x the speed of sound. Separately, the company is also looking to expand its services to start flying customers to orbital destinations such as the International Space Station. The orbital flight is typically much more expensive and currently costs about roughly $50 million today (versus suborbital flights that are priced at $250k per ticket) [1]

Recent Fundraising

On Monday, the company raised about $460 million by selling 23.6 million equity shares in a secondary offering priced at $19.50 per share. The should considerably boost Virgin’s cash balance, which stood at about $360 million at the end of Q2 2020.

How Does Virgin Galactic Make Money?

• Virgin will primarily make money by carrying tourists on its space planes. Customers will be able to experience a few minutes of weightlessness and also see the curvature of the Earth’s surface.
• The company has signed up about 600 future passengers, taking deposits of about $80 million. It has indicated that roughly 9,000 more prospective customers had expressed interest as of April 2020.
• Virgin’s Spaceship Two space plane can carry 6 passengers and 2 pilots. While the company currently has one vehicle, that can be re-used, the second and third vehicles are expected by the end of 2020 and 2021. [2]
• If we assume 50 flights over 2021 at full occupancy, this would translate into 300 passengers carried for the full year.
• As the company charges customers about $250k per ticket currently, total passenger revenues would stand at about $75 million in 2021.
• Besides this, the company has also been generating some revenue by carrying payloads into space and if we assume that this will remain flat at about $4 million, total revenues would stand at $79 million for 2021.