The first SpaceShip III vehicle, VSS Imagine.

Virgin Galactic

Virgin Galactic on Tuesday unveiled the latest spacecraft addition to its fleet, VSS Imagine, with the spacecraft representing the first of its next-generation SpaceShip III class of vehicles.

The rollout of VSS Imagine gives the space tourism company a second spacecraft to begin testing, as Virgin Galactic continues to work through final development testing of VSS Unity, with its next spaceflight test expected in May.

“For us to make the business start to scale, at the places that we’re aspiring towards, we need two things: We need many more ships than we have right now and we also need the ships that we bring forward to be built in a way that they’re able to be maintained in a way that we can have much quicker [turnaround times between flights] than what we have with Unity,” Virgin Galactic CEO Michael Colglazier told CNBC.

VSS Imagine is the third spacecraft the company has built to date, with VSS Enterprise having been destroyed in a fatal test flight accident in 2014 and VSS Unity having flown two spaceflights so far, its most recent in February 2019. Colglazier emphasized that VSS Imagine “has been designed in a way that’s taken the learnings we’ve had from all the flight testing on Unity.”

“That allows us to access things in the right way [with VSS Imagine] – we know what things need to be tackled on a routine basis, so that we can give people easy access,” Colglazier said.

Shares of Virgin Galactic rose more than 2% in premarket trading ahead of the announcement, up from its previous close of $29.21 a share.

The SpaceShip III class

Colglazier highlighted that the VSS Imagine is the first of the company SpaceShip III generation, and said the company is already “pivoting the manufacturing team to get to work” on the next spacecraft, which has been named VSS Inspire. The biggest improvement between the SpaceShipTwo and SpaceShip III classes is the turnaround time, both in terms of manufacturing each spacecraft and the amount of maintenance needed between each flight, Colgalzier said.

SpaceShip III was designed with a more “modular” approach than the previous generation, as Colglazier noted that VSS Unity “was basically built in place,” which is “just a slower process.”

“The SpaceShip III class, they’re built in components – assemblies are created in parallel,” he said.

Virgin Galactic President Mike Moses defined the “modular” advances of VSS Imagine as breaking production down into sections: “The fuselage, cabin, the wing body, the flat plane form of the wings, and then the tail booms – all were built separately.”

The company has yet to identify how many SpaceShip III vehicles it plans to build, but Coglazier highlighted that more spacecraft will be needed to fulfill the company’s demand backlog. Virgin Galactic also notably plans to re-open ticket sales fully after flying founder Sir Richard Branson, a flight test that’s expected this summer.

But while SpaceShip III features a variety of improvements, Colglazier said that it’s still “a fairly handcrafted piece,” and manufacturing does not yet have what “I call production level tooling.”

Virgin Galactic has created a new internal program called the Delta class, which the company is designing with the goal of being able to “build spaceships in parallel.” While the Delta class will functionally be the same as the SpaceShip III vehicles, Colglazier said the Delta’s are “where I think we hit scale on the manufacturing front.”

Additionally, Virgin Galactic is currently evaluating possible partners “to effectively accelerate our next mothership program,” Colglazier said.

Virgin Galactic has one carrier aircraft, or “mothership,” called VMS Eve, and Colglazier last month said the company will need to build more to reach its targeted flight rates. He believes it’s likely Virgin Galactic could “find some great partnerships” among aerospace companies to build the next carrier aircraft, as opposed to the company building “its own dedicated mothership assembly factory.”

Work continues toward May test flight

Virgin Galactic pilots walk to the company’s SpaceShipTwo Unity spacecraft, attached to the jet carrier aircraft Eve.

Virgin Galactic

Moses said Virgin Galactic is addressing the electromagnetic interference issue that delayed the second attempt of its December spaceflight test to May.

“You can never completely eliminate EMI – it’s an artifact of aerospace electrical systems – but we could really take the source of it down quite a bit and so that’s what the team has been busy doing,” Moses said.

Electromagnetic interference was the root cause of its December flight abort, and Moses said Virgin Galactic has made changes to some of its “electronic components, as well as on the sensors that those components then read and use to tell what’s happening” on VSS Unity.

“We’ve implemented both of those changes, we’ve tested them out on the ground. Now we’re installing them into the ship,” Moses said. “We’ll run a full end-to-end check on the ship and, assuming those results are good, we look like we’re still on track for that May target.”

Colglazier’s view of the space SPAC boom

Virgin Galactic notably went public through through a SPAC deal with Chamath Palihapitiya’s venture in 2019. A flurry of companies have followed suit recently, with seven space ventures in the past six months announcing SPAC deals: Redwire Space, Rocket Lab, Spire Global, BlackSky, Astra, AST & Science, and Momentus.

While Colglazier joined Virgin Galactic after it went public, he said he thinks there are two factors at play.

“The U.S. government [has opened] up markets for space, opening up the ability for commercial businesses to come in and bring a degree of innovation that probably didn’t exist before,” Colglazier said. “The second thing is, with as much innovation as you’re seeing coming up over the last kind of couple years, now you’re starting to see the technology coming to where innovation and just kind of entrepreneurial focus is able to find more and more opportunities.”

He believes these factors “are combining with a good capital market environment” to create “a growth industry here that didn’t exist just a few years ago.”

“Space is back in the consumer mind,” Colglazier added.

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