Each spaceport is $1 billion annual revenue opportunity

Virgin Galactic’s spacecraft outside Spaceport America in New Mexico.

Virgin Galactic

Virgin Galactic CEO Michael Colglazier outlined his long-term goals for the space tourism venture on Thursday, saying he sees the company bringing in up to $1 billion in annual revenue per spaceport in the years ahead.

“The first chapter of Virgin Galactic has been to accomplish an incredibly difficult task, creating a spaceflight system that can fly humans to space,” Colglazier said while discussing the company’s third quarter results on a conference call. “The next chapter of Virgin Galactic is to use this system to bring thousands and thousands of people to space and deliver our purpose of opening space to change the world for good. To reach this objective, we are embarking on a multi-year effort that will lead to flights not once a month, or even once a week – but targets flying 400 flights per year per spaceport.”

A daily launch tempo is years away still for Virgin Galactic, as the company is working to complete development of its SpaceShipTwo spacecraft. To date, the company has conducted two spaceflights – one in December 2018 and the other in February 2019 – and plans to fly two more test flights to space in the coming months before it flies founder Richard Branson.

Additionally, Colglazier noted that reaching 400 flights per year will require multiple spacecraft operating in Virgin Galactic’s fleet. Currently the company has one in testing, spacecraft Unity, and expects to complete manufacturing and rollout its second spacecraft in the first quarter of 2021. Colglazier emphasized the Virgin Galactic second and later spacecraft have been updated “to have a better turnaround time” between flights, saying they have a more “modular” design to improve the efficiency of inspection and maintenace.

It’s working on a third spacecraft, with Virgin Galactic in a regulatory filing on Thursday estimating it will cost between $35 million and $55 million to complete manufacturing on the second and third spacecraft.

Because of Virgin Galactic’s air launch approach to spaceflight – it uses a jet-powered carrier aircraft to bring the spacecraft up to an altitude of about 45,000 feet for launch – Colglazier also noted that the company is “going to need several motherships” at a spaceport to reach a flight rate of 400 per year. The company says it is “in the early planning stage to develop and build a second carrier aircraft.”

“In order to now pivot to be able to supply the demand that we expect, we are going to have to ramp up manufacturing in that regard. But I think it will be on the order of a few motherships, many spaceships and … a rocket motor for every flight as we go,” Colglazier said.

Given that each spacecraft can carry up to six passengers, UBS analyst Myles Walton highlighted in a note to investors on Friday that $1 billion in annual revenue and 400 flights per year implies a ticket price of about $400,000. The company previously sold about 600 tickets, reserved mostly at a price between $200,000 and $250,000 each. Virgin Galactic has not yet confirmed how much tickets will cost when sales reopen, but the company’s leadership has indicated it expects to price tickets higher than before thanks to significant demand.

Virgin Galactic’s spacecraft Unity glides in for a landing after a flight test in New Mexico on June 25, 2020.

Virgin Galactic

Virgin Galactic is working towards beginning commercial service flights from Spaceport America in New Mexico. But the company’s leadership has had discussions with other countries about setting up more spaceports around the world, including with Abu Dhabi, Italy, the United Kingdom, Australia and Sweden.

“I am very bullish on the transformational experience that we intend to deliver and the price points we believe we could command for this one-of-a-kind supply-constrained product,” Colglazier said.

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