Space tourism company Virgin Galactic has laid off 185 employees, approximately 18% of its workforce, the company announced on Saturday. The job cuts come as Virgin Galactic faces delays in the development of its next-generation spacecraft and struggles to generate revenue.
“We are taking these actions to ensure the long-term success of Virgin Galactic,” said CEO Michael Colglazier in a statement. “These decisions were not easy, but we believe they are necessary to secure our future.”
The layoffs will impact employees across departments including manufacturing, engineering, and operations. The company expects the job cuts to save $25 million annually.
The workforce reduction is part of a push by Virgin Galactic to conserve cash and refocus on long-term goals as it deals with several challenges. The company has delayed the rollout of its SpaceShip III, dubbed Delta, to 2025. Virgin Galactic also completed just two commercial spaceflights since beginning operations in 2018, far short of expectations.
In addition to the job cuts, Virgin Galactic will pause spaceflights in mid-2024 to concentrate resources on Delta’s development. Commercial flights are slated to resume in 2025 according to Colglazier.
“We remain confident in the future of space tourism,” he said. “We believe that this temporary pause will allow us to build a stronger company and return to flight even stronger.”
The layoffs and delayed spaceflights will negatively impact New Mexico’s economy. Virgin Galactic’s headquarters and spaceport operations are located in the state, making it one of New Mexico’s largest employers.
Despite current challenges, analysts retain optimism regarding Virgin Galactic’s long-term prospects. “Virgin Galactic is a pioneer in the space tourism industry,” said Morgan Stanley analyst Chad Smith. “The company has a strong brand and talented engineers. I believe they have the potential to overcome these hurdles.”
