Virgin Galactic is poised to become the first publicly traded space-tourism company.
British business magnate Richard Branson is planning to sell a 49% stake of Virgin Galactic to a special-purpose acquisition company for about $1.3 billion in cash and stock later this year, according to a statement. The money, which will give the new firm about $800 million in cash, should keep Virgin Galactic afloat until its rocket ships can begin taking customers to space in 2020.
“By embarking on this new chapter, at this advanced point in Virgin Galactic’s development, we can open space to more investors and in doing so, open space to thousands of new astronauts,” Branson said in a statement. “We are at the dawn of a new space age, with huge potential to improve and sustain life on Earth.”
Branson’s company, which is competing to make commercial space flight viable with Blue Origin, owned by Amazon’s Jeff Bezos, and SpaceX, run by electric car entrepreneur Elon Musk, expects to make more than 3,200 flights a year by 2023. Annual revenue then should reach $590 million, according to a regulatory filing.
Initial customers will be wealthy consumers willing to pay $250,000 per ticket for a four-day experience that includes three days of preparation and a little less than two hours in flight, some of it in the weaker gravity of low Earth orbit. It’s a broad market, the firm estimates: As many as 2.4 million people will have a net worth of $10 million or more by 2023, and those with a comparable level of wealth now spend $500,000 a week for yacht rentals and $230,000 a week for a private island.
The acquisition company investing in Virgin Galatic is a joint venture of Social Capital, founded by former Facebook executive Chamath Palihapitiya, and Hedosophia, co-founded by consultant Ian Osborne.
Branson has spoken publicly about dreams of public spaceflight for about two decades, beginning in the 1990s. He and aviation engineer Burt Rutan co-founded The Spaceship Company in 2005 after 17 successful flights by SpaceShipOne, a joint project.
The Spaceship Company became Virgin Galactic in 2012, after which Branson took over operations and has had to push back multiple targets for commercial spaceflight, beginning in 2007. In April 2018, Virgin Galactic completed the first supersonic, rocket-powered flight of its VSS Unity spaceplane, a craft built on the data and lessons of its predecessor vehicle, Enterprise, which broke up during a rocket-powered flight over California in 2014.
American commercial investment in space – once dominated by nation-states – has been growing since 1984, when Congress set up a licensing system for commercial rocket launches. Today, a sizable portion of U.S. spending consists of investments such as satellites used for television, communications and global positioning systems.
A 2004 law establishing a framework for privately-operated human spaceflight expanded the possibilities even further, opening the door to space tourism for companies such as Blue Origin and Virgin Galactic.
President Trump is making a concerted effort to woo such private investment, in part through the creation of what Commerce Secretary Wilbur Ross refers to as a “one-stop shop” for the industry within his agency. A streamlined, central interface will handle everything from remote sensing to export controls, trade promotion and space-traffic management, he said.
Among the unit’s priorities is easing the licensing process for commercial activities in space so that companies such as SpaceX can obtain blanket permits for operations like video-recording that would otherwise require separate applications for each trip.
