I mean, if he can fill seats at those prices, go for it. Especially if it pays for more seats and ships driving the per seat price down long term.
Hopefully this is the "hey, who wants to pay our development costs up front" charge. Like Kickstart backers. And that true operating costs are lower.
Found their quarter report.
Quarter of Strong Operational Progress Including: Successful Completion of Third Spaceflight; First Spaceflight from Spaceport America, New Mexico; Unity 21 in May Approval from FAA for Full Commercial Launch License in June Successful Completion of Fourth Spaceflight; First With a Full Crew...
investors.virgingalactic.com
So, in the second quarter, they made about $570k, with a cost of revenue, which should be "direct" costs of revenue, closest thing to variable costs easily available, of about $63k. That would be a base per unit profit of about 90%.
However, there is about 38 million in selling, admin, and general, and another 36 million in research and development. This adds up to a operating loss (per quarter) of about $73 million.
This suggests annual losses are currently in the $300 million dollar range. It also says they have about 600 reservations. So, if they were able to sell all of them the tickets in a year at the $450k price, that would raise about $270 million. Which is not enough to cover current per year expenses.
Assuming he sold for $450k, 90% of the ticket price was profit over the cost of the flight itself, so about $400k profit per flight, Virgin would need some 750 tickets per year to break even on current costs. At current capacity of about 6 passengers, that would take about 125 flights per year to break even at the $450k price.
Virgin Galactic is burning through piles of money for not super clear gains. They still have tons of money to burn, about 500 million in cash by the balance sheets. Some of that is pre booked tickets though, with deposit amounts apparently sitting at about 80 million dollars in customer deposits. So, if that's all pre paid $450k, they need to provide about 180 "free" flights before they can generate any new revenue.
The big safety blanket in all this is that their a publicly traded company, so the plan currently seems to be to sell $500 million or so dollars in shares every year.
They're hope seems to be to be able to run 400 flights per year per aircraft. This is something they can't do yet: the current one apparently has an 8 week turnaround, the next one which is supposed to come along soon has a 1 week turn around. If he can get 5 of those up and launch each one once a week, so say 250 flights a year, maybe boost up to 8 passengers for 2,000 flights per year. If the total costs could be kept per year to about $300 million, then break even cost there would be $150k.
So, getting down to $200k requires that scale of operation, which is still an immensely high cost. Then again, if they had $200 million in income, that could justify a market cap around $4 billion, which if Virgin could capture about half of that in stock sales, the stock sales could still cover all past (about a billion in current deficits so far) and a future capital investments. In which case at 2,000 seats a year they can potentially cover all operating costs at about $100k.
www.complex.com
www.space.com
www.upi.com
www.discovermagazine.com
www.bbc.com
