Ahead of Virgin Galactic's third-quarter earnings call Wednesday, the space tourism company notified all employees of a strategic realignment and related workforce reduction to support the production of its Delta-class spaceships in a company-wide email from CEO Michael Colglazier made public late Tuesday afternoon.
Colglazier said in the email the realignment and workforce reduction come amid uncertainty in capital markets. "We are going to succeed in this environment by focusing our full company efforts on the safe, efficient and successful completion of our Delta program that will allow us to create positive cash flow," he wrote.
The email notes Virgin Galactic (NYSE: SPCE) will make calls to all employees starting today and extending through Thursday to confirm employment status. It also notes the company will work from home for the remainder of this week, "as on-site work locations will be unavailable through the end of the week."
Representatives from Virgin Galactic couldn't immediately be reached for comment. Virgin employs about 300 people in New Mexico and is the anchor tenant at New Mexico's Spaceport America, where it leases an approximately 120,000-square-foot multi-purpose hangar facility called the "Gateway to Space" building.
"This is a tough moment … but these actions are being taken to remove reliance on unpredictable capital markets, and these actions protect our ability to succeed as we build and lead our industry through the long term," Colglazier wrote in the email.
The company plans to share more information about its realignment plans during Wednesday's Q3 earnings call, scheduled for after markets close at 3 p.m. Mountain Time.
The Delta program, which Colglazier referenced in his email to employees, comprises Virgin Galactic's efforts to get its next generation of spaceships, called the Delta class, ready for operations. Colgalzier and Chief Financial Officer Doug Ahrens have laid out a timeline in previous earnings calls that would see initial testing of those ships in 2025 and commercial service by 2026.
Virgin Galactic plans to assemble its Delta-class ships — which Colglazier has said could increase the company's flight cadence to multiple missions per month — at a facility near Phoenix. That facility is expected to be operational in 2024, and Virgin partnered with a pair of Texas-based companies — Bell Textron Inc. and Qarbon Aerospace — to supply sub-assembly parts for its Delta-class ships.
Its business update comes as Virgin Galactic's spaceflight operations out of Spaceport America have ramped up in recent months. Virgin flew its second research mission of the year out of the Spaceport last week, which marked the sixth time the space tourism company has flown out of New Mexico in as many months.
Despite its more regular flight cadence, Virgin Galactic's stock price has trended steadily downwards over the past six months, per MarketWatch. The stock hit a high mark of $6.01 on June 20 before steadily slumping down to a six-month low of $1.38 on Oct. 27.
Virgin Galactic stock closed Tuesday at $1.74 and is trading at $1.73 after hours at the time of publishing.
