Virgin Galactic will increase the frequency of suborbital flights on new Delta ships to 125 per year

Virgin Galactic has tried to prove to investors that Delta’s next-generation aircraft, due to begin service in 2026, will improve the profitability of its suborbital tourist flight business. The company held a meeting this week to discuss its second-quarter financial results, as well as present a financial model showing how the new ships could radically change its earnings.

Image source: Virgin Galactic

«There are many opinions on Virgin Galactic’s business model across various social media and platforms. We have found that more often than not, these opinions lack key information,” Virgin Galactic Chief Executive Michael Colglazier said during calls with investors.

Colglaser, along with Virgin Galactic CFO Doug Ahrens, gave investors a presentation that outlined the company’s business model that would be adopted once Delta’s ships enter service. Virgin Galactic expects that with the help of two Delta ships it will be possible to increase the capacity to conduct about 125 suborbital flights per year.

On any given Delta flight, six tourists can be on board, i.e. the company plans to transport 750 people per year. With an average suborbital flight ticket price of $600,000, annual revenue would be $450 million. After taking into account the cost of operating suborbital flights and other expenses, Virgin Galactic estimates that it will be able to generate adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $95 million up to $110 million per year.

In the future, Virgin Galactic plans to expand the number of equipment used. When the company has four Delta ships and two carrier aircraft, it plans to carry out 275 suborbital flights per year. This will bring the company’s revenue to $990 million per year and adjusted EBITDA between $450 million and $500 million per year.

In addition, Virgin Galactic is considering the possibility of creating a second spaceport, which, according to the presentation, could be built in Europe or the Middle East. With four more Delta ships and two carrier aircraft based at the facility, the company forecasts full-year revenue of $1.98 billion and adjusted EBITDA between $1 billion and $1.1 billion.

These financial models are based on several assumptions that have been made based on the research conducted. The company predicts high demand for suborbital flights, thanks to which the annual customer base could amount to hundreds or even thousands of people. The company estimates that Virgin Galactic’s potential customer base worldwide is about 300,000 and will grow at 8% per year. Today the company has about 700 clients.

At a meeting with investors, Virgin Galactic management said that the company expects to produce and operate Delta ships without going beyond previously planned costs. The Delta, which is similar in appearance to the currently used VSS Unity but can fly more frequently and carry more people at a time, should soon move from design to production. The ship’s parts will be produced by Virgin Galactic’s partners, and final assembly is planned to take place at a plant located near Phoenix, Arizona. Delta components will begin arriving at Virgin Galactic in the first half of 2025, with testing of the fully flight-ready vehicle scheduled for the second half of that year. Delta’s first suborbital commercial flight with tourists on board is planned for 2026, but a more precise period has not yet been determined.