Virgin Galactic’s Next Challenge: The Flight of the Vested?

Richard Branson and other passengers float around in weightlessness. (Credit: Virgin Galactic)

by Douglas Messier
Managing Editor

This was supposed to be the Summer of Virgin Galactic. The company would complete the three remaining suborbital flight tests of SpaceShipTwo VSS Unity, the second one with Richard Branson aboard. The company’s newest space tourism vehicle, SpaceShipIII, would begin its flight tests.

Once VSS Unity tests were complete, engineers would spend four months making a series of repairs and upgrades to the spacecraft and its WhiteKnightTwo mothership, VMS Eve. And then in early 2022, the company would use both spaceships to fly tourists on suborbital joy rides that were originally projected to begin 15 years earlier in 2007.

Sounds easy enough, right? It wasn’t. The Summer of Virgin Galactic went about as well as the Summer of George on Seinfeld. If best laid plans of mice, men and Costanzas often go awry, Virgin Galactic’s schedules are guaranteed to move significantly to the right. Years to the right.

As summer drew to a close last week, Virgin Galactic had completed only one of the three planned flight tests. The company’s only spacecraft, VSS Unity, was grounded by the Federal Aviation Administration (FAA) because it flew outside its assigned airspace during that flight on July 11. It will remain so until the agency signs off on an investigation into the incident. Meanwhile, Virgin Galactic won’t fly tourists for another year, which is more than two years behind the schedule it published before going public on the New York Stock Exchange in October 2019.

Virgin Galactic’s failure to disclose information about the incident (it was revealed in a Sept. 1 magazine article) earned the company a rebuke from Bank of America analysts who follow its stock. The silence also raised questions about stock sales by Virgin Galactic and Branson totaling $500 million and $300 million, respectively, while shareholders remained unaware of what was happening behind the scenes. (A spokesperson for Branson, who was on the July flight, said the billionaire was as much in the dark as other shareholders when he sold the stock.)

Virgin Galactic is planning to conduct one more flight test with VSS Unity with Italian researchers aboard in mid-October if the FAA signs off on the investigation in time. The spacecraft and its mothership then will be taken into the hangar for eight or nine months instead of originally planned four while more extensive upgrades and repairs are done.

After all that work is completed next June, Virgin Galactic will conduct VSS Unity‘s final flight test. Then the first commercial tourism flight will take place in late Q3 2022, which will be about a year from now.

Virgin Galactic chose to focus on VSS Unity this summer, so there were no SpaceShipIII flight tests. With the the company’s only WhiteKnightTwo mothership due to be laid up soon, those tests will be postponed by about a year to next summer.

One bright spot this summer was that Branson was finally able to fly to space. The billionaire said the flight was indescribable, and then made the media rounds describing it to anyone who would listen. It turned out to be every bit as awesome as he promised it would be for 17 years.

Branson was supposed to be on a later flight test, but he moved up to the July 11 launch. Branson denied that he did so to beat rival Jeff Bezos, was flew aboard Blue Origin’s New Shepard suborbital vehicle nine days later on July 20. But, nobody believed him; a source told Parabolic Arc that was exactly what happened.

But, all glory is fleeting. Branson and Bezos were upstaged by two fellow billionaires only two months later when SpaceX launched the Inspiration4 mission. While Virgin Galactic and Blue Origin sent four people each to float around weightless for about three minutes, Elon Musk’s SpaceX sent fellow billionaire Jarred Isaacman and three averagenauts into orbit for three days.

As they say, timing is everything. Had Virgin Galactic begun commercial flights anywhere close to its original 2007 goal, the company would have had a monopoly on space tourism for a decade or longer, well before Bezos and Musk managed to get their vehicles into space.

Branson congratulated Musk and SpaceX on Twitter for getting the Inspiration4 crew into orbit. The success of the mission certainly benefits Virgin Galactic by bringing credibility to the nascent private human spaceflight industry. But, one imagines Branson sitting with a drink on his private Caribbean island, gazing out at another gorgeous sunset, and ruing a missed opportunity to have been the undisputed leader in the field.

Just as Virgin Galactic’s engineers begin upgrades on VSS Unity and VMS Eve next month (schedule providing), the company could be facing a major problem. At least according to an anonymous review posted on Glassdoor.com by someone who claimed to be an employee in Mojave. (Emphasis mine)

This was an amazing place to work and I desperately want it to be that way again, but right now I don’t see that happening. Everyone is out of patience and is tired of hearing that fixes are coming “soon” – you need to start making changes *immediately*. If you don’t take action on the deep structural issues you claim to be aware of, you will lose a huge number of experienced employees once stock options vest in October. That loss of knowledge will easily set the program back at least a year- if the company can even recover from the resulting loss of investor confidence.”

The writer’s reference to “deep structural issues” appears to be a reference to the way the company is managed and run, not a comment on modifications to the two vehicles.

Virgin Galactic went public on the New York Stock Exchange on Oct. 28, 2019. So, vested employees who want to leave will likely do so around or after that date.

And why not? Commercial tourism flights are still a year away (if the schedule holds). The company will have little revenue during the next 12 months, which will depress the stock price. As for when Virgin Galactic will be profitable….who can say?

Nobody could blame them for cashing out. It’s what some of the major shareholders have done. Branson and the Virgin companies he controls have sold about $1 billion since Virgin Galactic went public. Branson continues to own 18 percent of the company.

Chamath Palihapitiya, the billionaire who led the special purpose acquisition company that took Virgin Galactic public through a merger, personally invested $100 million and then sold $313 million worth of shares. He also continues to own a substantial share of Virgin Galactic indirectly through Social Capital Hedosophia, which took Branson’s company public.

So, why not take the stock and run? The space industry is booming, companies are hiring, startups are multiplying like rabbits. There’s lots of opportunities out there. Those who don’t want to work for someone else could elect to strike out on their own.

On Friday, Virgin Galactic announced that it had appointed a former Disney Company vice president Aparna Chitale as the company’s new Chief People Officer. (Yes, that’s what they call their head of human resources.) It sounds like she might have her work cut out for her.