Virgin Galactic cutting jobs, expenses as interest rates bite
Virgin Galactic CEO says layoffs needed to cut costs in high interest rate environment
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Virgin Galactic announced Tuesday it will slash its workforce and expenses in a "strategic realignment," citing the high interest rate environment as a reason behind the move.
The aerospace company founded by billionaire Richard Branson made the revelation in a press release Tuesday, sharing an internal email Virgin Galactic CEO Michael Colglazier sent employees, informing them of the job cuts.
The Virgin Galactic SpaceShipTwo space plane Unity returns to earth after the mothership separates flying way above Spaceport America, near Truth and Consequences, New Mexico on July 11, 2021. The aerospace firm announced Tuesday it will be cutting i (PATRICK T. FALLON/AFP via Getty Images / Getty Images)
Colglazier said the company must focus on the production of its Delta Class spaceships to profitably scale the business, and that it would require investing in upfront capital in order to do so.
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"Recently, however, uncertainty has grown in the capital markets. Interest rates remain high, which adds pressure to companies who are investing today for profits that will come in the future," the CEO wrote. "Geopolitical unrest continues to expand, and the combination of these factors makes near-term access to capital much less favorable."
Virgin Galactic CEO Michael Colglazier (Virgin Galactic / Fox News)
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Colglazier said that in order to bring the Delta fleet into service, Virgin Galactic needs "to extend our strong financial position and reduce our reliance on unpredictable capital markets. We will accomplish this, but it requires us to redirect our resources toward the Delta ships while streamlining and reducing our work outside of the Delta program."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPCE | VIRGIN GALACTIC HOLDINGS INC. | 0.89 | +0.02 | +2.55% |
Virgin Galactic Holdings, Inc.
The chief executive told the workers each of them would receive a call over the next few days, confirming their employment status. He added, "To those who will be leaving, I am very sorry these changes will impact you so directly."
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Virgin Galactic did not reveal the number or percentage of employees that will be let go, but a spokesperson told FOX Business further details would be revealed ahead of its third-quarter earnings call slated for 5 p.m. ET on Wednesday.