Richard Branson's Virgin Galactic Holdings' (NYSE:SPCE) CEO Michael Colglazier said on Wednesday that the company will "substantially" wrap up the design phase of its Delta Class spaceships in the third quarter and then move on to the build and test phases.

What Happened: Virgin Galactic's Delta Class spaceships are on track for commercial service in 2026, the company said. Delta Class will replace the company's VSS Unity spaceplane which had its last commercial flight in the second quarter.

"With unprecedented turn times and reusability metrics, our Delta ships are planned to disrupt the historic cost structure of human spaceflight and deliver strong profit margins," Colglazier said during the company's second-quarter earnings call.

The Delta Class spaceships will have an average turnaround time of just three days, company CFO Doug Ahrens said. Turnaround time, here, refers to the time required between two flights of a single launch vehicle.

Financial Impact Of Delta Spaceships: Following the initial ramp-up period following the launch of the company's first two Delta class spaceships, Virgin Galactic expects to have the capacity to deliver approximately 125 spaceflights per year.

Each spaceship will have six seats and with the current price of $600,000 per seat, this would allow annualized revenue of $450 million and adjusted EBITDA of over $100 million, Ahrens said. Following the addition of another mothership such as the VMS Eve and two more spaceships to the company's fleet, it expects flight capacity to increase to around 275 flights per year with annual revenue going up to about $1 billion with about 1,650 seats sold per year.

However, the company will reassess pricing once it opens up sales for the Delta ships, Ahrens said.

Even as the company scales its fleet, Virgin Galactic expects demand to far exceed supply. The company, hence, also plans to build additional spaceports in other parts of the globe, Ahrens said.

Why It Matters: Despite its high expectations for the future, Virgin Galactic posted a net loss of $94 million for the second quarter, compared to a $134 million net loss in the second quarter of 2023, with the improvement primarily driven by lower operating expenses.

Quarterly revenue came in at $4.22 million, which beat the analyst consensus estimate of $3.361 million by 25.56% and represents a 125.55% increase from the same period last year.

Virgin Galactic sees free cash flow for the third quarter of 2024 to be in the range of negative $115 million to negative $125 million.

Price Action: Virgin Galactic shares closed down 6.6% at $5.27 on Wednesday. The stock is down nearly 89% year-to-date, according to data from Benzinga Pro.

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Courtesy: Virgin Galactic