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Sunday, December 3, 2023

No further investments in Virgin Galactic, says Richard Branson

Out of dough —

Branson’s business empire “no longer has the deepest pockets.”

Philip Georgiadis and Peggy Hollinger, Financial Times

Virgin Galactic founder Richard Branson.

Eric Berger

Sir Richard Branson has ruled out putting more money into his lossmaking space travel company Virgin Galactic, saying his business empire “does not have the deepest pockets” any more.

Virgin Galactic, which was founded by Branson in 2004, last month announced it was cutting jobs and suspending commercial flights for 18 months from next year, in a bid to preserve cash for the development of a larger plane that could carry passengers to the edge of space.

The group has said it has enough funding to carry it through to 2026, when the bigger Delta vehicle is expected to enter service. But some analysts are expecting Galactic to ask investors for more money in about 2025.

Asked whether he would consider putting more cash into the business if needed, Branson told the Financial Times: “We don’t have the deepest pockets after Covid, and Virgin Galactic has got $ 1 billion, or nearly. It should, I believe, have sufficient funds to do its job on its own.”

Branson said he was “still loving” the Virgin Galactic project and that it had “really proved itself and the technology” of commercial space flight. Galactic has just completed its sixth commercial flight in six months, with tickets starting at $450,000 a seat on its rocket-powered Unity space plane.

Virgin Group is still one of Galactic’s biggest shareholders, despite selling more than $1 billion of shares in 2020 and 2021, reducing its stake to 7.7 percent and using the funds to protect other parts of its sprawling leisure and travel business during the pandemic.

Branson’s rocket start-up, Virgin Orbit, collapsed eight months ago ↗ after a failed launch from the UK, its first in five missions. The start-up, 75 percent owned by Branson, ran out of cash as its UK mission encountered repeated delays.

Analysts said Galactic had learned the lesson of Orbit and was not prepared to spend all of its cash on lossmaking flights. “This business is built to be operated at scale and by having flights on just Unity you knew it wouldn’t reach the scale needed and cover its costs,” said Greg Konrad, analyst at investment bank Jefferies. Delta is expected to carry six passengers, against Unity’s four, and will launch more frequently.

Galactic, which has yet to make a profit, was valued at $2.3 billion when it debuted on the New York Stock Exchange in 2019. The company was valued at $935 million as of the close of trading on Friday.

Branson, who spent decades burnishing the image of his business with high-profile adventures and stunts, said he now spends 90 percent of his time on philanthropic work, but that there was still “a hell of a lot going on” at Virgin Group.

The group owns an investment portfolio that includes stakes in a range of businesses including in travel, entertainment and telecoms.

Branson also said the business might get involved in UK rail services again. Its involvement ended in 2019 after Virgin Trains lost the West Coast franchise. “I would not be surprised if one day Virgin is not back in trains,” he said.

Branson talked to the FT on a Virgin Atlantic flight that was the first to fly from London to New York on reused cooking and animal fats.

He said the UK should support the sustainable fuels industry, partly to reduce its reliance on imported oil.

“It needs the government to sit down with the industry just to open the books and see how we can make this work,” he said.

© 2023 The Financial Times Ltd ↗. All rights reserved ↗. Not to be redistributed, copied, or modified in any way.

James Mackreides
James Mackreides
'Mac' is a short tempered former helicopter pilot , now a writer based in Sofia, Bulgaria. Loves dogs, the outdoors and staying far away from the ocean.

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