Correction appended
Soaring 50 miles above Earth’s surface was an exhilarating moment for Richard Branson, who became the first billionaire launched to the edge of space and finally could see his decadeslong pursuit of suborbital flights within his grasp.
A crowd of 500 people gathered at Spaceport America in July to watch the historic flight, among them Gov. Michelle Lujan Grisham and former Gov. Bill Richardson, who had made a handshake agreement with Branson 15 years before to create this New Mexico hub for space tourism.
The spectators, some of whom were celebrities, were jubilant to see Branson, Virgin Galactic’s founder, and his crew pull off a successful test flight after years of problems. And Branson was clearly gleeful. He experienced space sooner than his rival Jeff Bezos, whose own suborbital flight had been planned nine days later
But the triumph would be short-lived.
Reports emerged of the spacecraft veering off course after it rocketed away from the mothership that hauled it to 50,000 feet in altitude. That led to a monthlong grounding of flights in September before the company announced in mid-October it would postpone commercial passenger service until the fourth quarter of 2022, citing a need to improve flight performance.
The news caused Virgin’s stock to tumble.
Virgin’s latest snags — and a further delay — call into question the outlook for the spaceport, whose fortunes are to some extent tied to the company and its success at establishing space tourism at this complex in a remote area near Truth or Consequences. The spaceport, in fact, was built primarily to accommodate Virgin.
Scott McLaughlin, the spaceport’s chief executive, said there’s no need for concern as long as Virgin keeps paying $5.5 million in yearly fees.
“So this planned flight downtime does not necessarily have a direct impact on Spaceport America’s financial picture,” McLaughlin said.
Even if Virgin’s commercial flights don’t take off for a few years, the impacts will be felt more in the local economy, where businesses have been waiting for the boost that space tourism will bring, he said.
“Once Virgin Galactic is flying to space regularly, there will be tourists and other guests staying in hotels and spending money in Las Cruces, Truth or Consequences and, ideally, all around New Mexico,” McLaughlin said.
Looking to other tenants
The governor and other state leaders also have been eager for Virgin to launch regular passenger flights to justify the sizable investment of public dollars in creating the spaceport.
The state paid roughly two-thirds of the $200 million-plus in construction costs, and the rest was covered by a gross receipts tax approved by Sierra and Doña Ana counties.
However, State Rep. Rebecca Dow, a Republican from Truth or Consequences, played down Virgin’s importance to the spaceport and the area’s economy.
“Virgin has been an anchor tenant, but they’re not the only tenant,” said Dow, who is seeking the Republican nomination for governor in 2022. “Space tourism is one of many things happening at [the] spaceport.”
New Mexico should tap into the aerospace industry, including for this complex, and not worry too much about a single company, she said, adding the state has the chance to be an aerospace leader.
“And [the] spaceport has a role to play, with or without Virgin,” Dow said.
McLaughlin said Virgin was the mainstay, providing the bulk of the revenues.
But, like Dow, he said the spaceport must diversify and not rely too much on Virgin.
“We are always working to find new customers and tenants,” McLaughlin said. “We especially focus on tenants that will create full-time jobs at the spaceport.”
This year, AeroVironment, a military contractor that produces drones, brought two new programs to the spaceport, he said.
One of AeroVironment’s projects is an unmanned glider that acts as a giant wireless transmitter in the sky.
There are two other full-time tenants, plus intermittent users such as Boeing.
Up Aerospace has installed its own launch rail to shoot rockets an average of 71 miles in altitude to test how well various payloads, such as electronic instruments, can be carried into space. NASA is among the company’s clients.
SpinLaunch, another tenant, uses a massive centrifuge to hurl rockets as high as 200,000 feet with the aim of eliminating fuel-powered launches.
The company is close to completing its $38 million in construction and will begin hiring in the coming months, McLaughlin said.
McLaughlin said his team is talking to rocket developers, selling them on the site’s advantages, such as good weather, the area’s sparse population and access to military airspace at the nearby White Sands Missile Range.
Military leaders have agreed to let the spaceport use White Sands’ 6,000 square miles of restricted airspace, giving it an unencumbered path to launch.
With normal airspace regulated by the Federal Aviation Administration, the spaceport would have to ask the agency to reroute or postpone commercial flights so they don’t intersect with spacecraft launch paths.
Virgin hits some turbulence
At this point, Virgin has barely taken advantage of the military airspace and other perks.
After a series of delays, Virgin launched the first successful test flight from the spaceport in May, followed by Branson’s July flight that carried the crew to about 53 miles in altitude.
Zooming to a zero-gravity zone and a dizzying height where Branson could gaze at Earth’s blue curvature was deemed bold by some and reckless by others.
The original plan called for another test flight before Branson would take his suborbital sojourn, but then he got word that Bezos planned to ride his spacecraft to the fringe of space July 20. Virgin scheduled a flight for July 11.
Bezos was widely mocked on social media for donning a cowboy hat for the flight and for the phallic shape of his New Shepard spacecraft.
Despite these quirks — or perhaps because of them — Bezos overshadowed Branson.
He followed up with a second flight carrying 90-year-old William Shatner, who played Capt. James T. Kirk in the original Star Trek series.
Both flights went off without a hitch.
Branson’s flight was a different matter. Warning lights flashed on as the spacecraft deviated from its course and, at one point, veered into unauthorized airspace.
The Federal Aviation Administration in early September grounded Virgin while it conducted an investigation that centered on air traffic control and mission notifications. It lifted the suspension several weeks later.
Then in mid-October, Virgin announced it would postpone paid commercial flights until the fourth quarter of 2022; it had planned to launch them in the third quarter.
Although the delay is only a few months, the mechanical issues behind it are one more reason to make investors uneasy with a company that began publicly trading stock in 2019 to bolster its capital.
After the announced delay in paid passenger trips, Virgin’s stock quickly dropped to about $20 per share from $24. Shares have since dipped further, closing the week below $19.
Virgin said it required additional time for an “enhancement program” to improve flight performance on its space vehicles.
It also said a lab test detected “a possible reduction in the strength margins of certain materials used to modify specific joints.”
Adding to the drama was the firing of Virgin’s head test pilot, Mark “Forger” Stucky, who complained on social media he lost his job for criticizing the company in a book by New Yorker writer Nicolas Schmidle. Stucky recently went to work for Bezos’ Blue Origin.
Virgin continues to struggle financially with little income due to the stalled commercial flights. It logged a total of $224 million in net losses in the first two quarters of 2021, an improvement over the $449 million in net losses for the same period in 2020 but still hefty.
Roughly 600 wealthy, aspiring spacefarers have paid as much as $250,000 per ticket. And Virgin has raised prices to $450,000 a ride. So far, that has not stanched the bleeding.
Virgin hopes to eventually launch 400 suborbital flights a year at the spaceport, but that seems like a distant goal.
McLaughlin said he hopes the company can pull through its current challenges. Virgin’s plans to expand its fleet to two motherships and several spacecraft would benefit the spaceport.
He’s also confident the spaceport could withstand parting with Virgin if it ever came to that.
“If Virgin Galactic was no longer a customer, we would work hard to find a new tenant for the Gateway to Space hangar,” McLaughlin said, referring to the building that houses Virgin. “The Gateway to Space is an incredible facility, and we believe we would find another tenant.”
Correction: A previous version of this story incorrectly reported that Virgin Galactic's postponement of commercial passenger service was related to a defect in the spacecraft. Also, a Federal Aviation Administration investigation centered on air traffic control and mission notifications, rather than a glitch in the spacecraft, known as Unity 22. The story incorrectly said Richard Branson, the founder of the company, scheduled a July 11 flight. He did not.
