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Virgin Galactic, the biggest rival in Musk space, wants to bring more people into space

According to reports, Virgin Galactic will merge with the acquisition-type investment company “Social Capital  Hedosophia” (SCH), which plans to invest about US$800 million in Virgin Galactic to obtain a maximum of approximately 49% of the company. As part of this investment share agreement, Virgin Galactic will be available in the second half of this year.

Virgin Galactic has identified a market that is far larger than a space journey that allows the rich to enjoy weightlessness. The company will use its hypersonic spacecraft for suborbital flights. This will dramatically reduce the current flight time of some of the longest flights on the planet, reducing travel time for travelers.

On July 9th, local time, Virgin Galactic CEO George Whitesides said that the merger of Virgin Galactic and SCH “affirmatively” will speed up the company’s timetable for developing aviation plans. He said the business may be launched in less than 10 years and will shorten the existing flight time from Los Angeles to Tokyo by more than an hour. The current voyage takes 10 hours, and the Virgin Galactic method is to fly over the atmosphere at speeds of more than 5 times the speed of sound.

“They bring more than just money to this partnership, and there are many other things.” Whitesides pointed out when talking about SCH. Two years ago, the blank check company, which was listed on the New York Stock Exchange in the form of a SPAC (special purpose acquisition company), raised $600 million from 20 cornerstone investors. Whitesides described the founder of SCH as “one of the best business people in the world.”

New company chairman

According to a statement issued by Virgin Galactic, SCH will own a 49% stake in the combined company. The deal will raise about $800 million for Virgin Galactic, and SCH founder Chamath Palihapitiya will invest $100 million to become the chairman of the combined company.

The deal will provide more funding for Virgin Galactic until the Virgin Galactic spacecraft business is operational and profitable. Palihapitiya said Virgin Galactic’s goal is to achieve profitability in August 2021. He also said that commercial space travel will start within one year and start hypersonic flight business within 5 to 10 years.

Palihapitiya, who founded SCH, is an early Facebook executive. Before the company’s IPO in September 2017, he offered a unique idea to investors. The company will spend two years looking for a promising listed company on a global scale. In the end it chose the Virgin Galactic.

When talking about Virgin Galactic, Palihapitiya said: “Frankly, when I saw this company, I was very shocked by their products and the quality of their future business.”

When creating SCH, Palihapitiya stated that his expertise is to find the right product for different markets. He is looking for a company that can benefit from his expertise. Now he can try to apply this feat to space travel.

Compared with the media’s excitement, the stock market reacted flatly to this merger plan, and SCH closed up 2.4% to $10.69 on the day. The stock has been around $10 since its listing and has a total market capitalization of about $900 million.

New era of supersonic flight

Elon Musk, founder of Virgin Galactic rival SpaceX, also discussed about creating a peer-to-peer hypersonic travel business as a profitable space travel program. Currently, supersonic travel is the goal of other aviation startups. Old aircraft manufacturers such as Airbus and Boeing, as well as start-ups such as Boom and Aerion, are conducting research on supersonic aircraft.

In the 1970s, passengers’ pursuit of flight speed led to the Concorde supersonic airliner. But after running for less than 30 years, a serious loss made it launch the aviation arena.

At present, companies competing to build supersonic travel have found that the biggest obstacle to this business is not technology or economy. It’s the huge carbon emissions and noise caused by ultra-high-speed flights. The suborbital flight adopted by the Virgin Galactic has undoubtedly solved the latter two problems. Come to think of it. From New York to London, from San Francisco to Tokyo, and no need for long, boring flight times. This vision is undoubtedly extremely tempting.

UBS analysts said that by 2030, the space business will grow from $244 billion in 2010 to $805 billion. Branson’s planned space travel business will eventually be worth more than $3 billion. Analysts estimate that if suborbital flights can account for 5% of the market, the value of using suborbital flights to reduce long-distance travel time can be much greater, reaching $20 billion a year.

For adventure

Branson, who founded Virgin Galactic, is 68 years old. He has always been adventurous. Branson used to travel on a hot air balloon for global travel. He also tried to create the fastest record of sailing across the Atlantic. Branson even used tanks on Times Square and crushed it. Blocking the low wall of Coca-Cola is just to promote the “Victorian Cola” of your family. The Virgin Group he founded has operations in aviation, railway, hospitality, media, books, records, sports and many other industries.

Unlike Bezos and Musk’s idea of ​​changing humanity through space travel, Branson’s passion for space travel is only due to his adventurous spirit. In an interview, he said, “I believe that once people enter space, they will try to solve what is happening on this planet with great enthusiasm when they return.”

He founded Virgin Galactic in 2005 and believes that a short suborbital flight will also become a transcendent user experience. Virgin Galactic plans to carry six passengers for “sub-orbital” flights each time, with a maximum altitude of more than 80 kilometers above the Earth. The company’s spacecraft is like an airplane, not a reusable rocket built by Bezos’ “blue origin.” This is what Branson believes is the advantage, because it may also enter the aviation market.

In October 2014, Virgin Galactic suffered a fatal accident when testing Spacecraft 2, the spacecraft crashed and a test pilot was killed. The company originally planned to rebuild a spaceship in two years, but in February 2016, the construction of the new “Spacecraft 2” was basically completed, and several afterburning tests were conducted in 2018.

In addition, Branson also founded Virgin Rail in 2017. The company is developing a new rocket called LauncherOne to send satellites into low Earth orbit. Unlike most rockets today, LauncherOne plans to launch into space in the air.

Space traveling

Hundreds of people have signed up for the Virgin Galactic space travel program, which costs $250,000 or more. But in order to attract millions of people to experience space travel, prices must fall. According to Bank of America Merrill Lynch, the best price that mass consumers can accept is $50,000.

There are still many risks in space travel. In 2014, a “Spaceship 2” crash on Virgin Galactic caused a pilot to die. The accident also caused the sub-orbital flight, which was almost successful, to be suspended for four years.

The investment in Virgin Galactic will also be a gamble. In the fierce competition to send customers into space, Branson can beat Amazon’s founder Jeff Bezos and Tesla’s Musk Strong opponent.

Virgin Galactic currently holds $80 million in deposits from more than 600 customers. The Virgin Galactic spacecraft will allow passengers to stay in the air for 90 minutes. At the critical stage of the flight, the spacecraft will climb up in a nearly vertical manner, and passengers will experience weightlessness during sub-orbital flight, unfasten the seat belt and float in the cabin for about 4 minutes, and overlook the stunning Earth curvature.

Virgin Galactic CEO Whitesides said that the Virgin Galactic space journey will not make passengers feel uncomfortable. “As long as there aren’t repeated flights, most people won’t be bothered by this.” He said, “From a medical point of view, we don’t think most adults will have problems because gravity overload is only three to four G.”

Whiteside is also one of the early clients of Virgin Galactic. Before he joined Virgin Galactic as CEO, he booked two seats for himself and his wife.

Whiteside said that about 2,500 people expressed interest in becoming Virgin Galactic’s customers, and if they also joined the reservation, the Virgin Galactic space flight will need to last for about four years. But he said, “About five years ago, we suspended sales.”

The booking fee will be a large disposable cash for Virgin Galactic. Many people will assume that this market may have 350 customers per year. But Whiteside does not recognize this.

“This is a new product,” he said. “You can’t just divide by the year and say that this is the market size. It’s like asking, how big is the market size of the mobile phone? Then take the sales volume three years ago as the benchmark. We believe that the total number of people who want to experience will be far Exceeding the capabilities of us or any other company.” He believes that this will translate into a goal of achieving “hundreds” of customers per year in the short term. The numbers will eventually reach 1,000 to 2,000. “That will be a huge success.”

When it comes to space travel prices, Whiteside predicts that prices may fall over time, but not too cheap.

Arrow on the Bow string

In February of this year, “Spacecraft 2” was the first to carry passengers to test flight successfully. In addition to the two pilots, the aircraft also carries the Virgin Galactic chief astronaut instructor Beth. He has worked in NASA for 24 years and is currently responsible for professional training for space visitors. During the test flight, Beth verified the collected data and conducted professional evaluations of the cabin and space environment to pave the way for the official commercial space travel.

Dallas Kasaboski, an analyst at Northern Sky Research, said: “Virgin Galaxy is far ahead of its technology.” “But this market is still in its infancy, facing the risk of logistical barriers and unexpected costs. ”

Branson plans to conduct his first space flight this year or next, which of course depends on the speed of further flight tests in New Mexico. Virgin Galactic will take 100 employees from a test center in California to speed up the process. Whitesides said the next flight will take place before the end of the year.

The Virgin Rail Company is also moving forward. This month it has just successfully tested a rocket from the wing of a modified Boeing 747 jetliner. The 21.34-meter-long rocket was completely separated from the passenger plane at an altitude of about 10,000 meters and eventually fell to the Mojave Desert as planned. Dan Hart, CEO of Virgin Rail, said, “The responsiveness of the air launch platform is unparalleled, and we can launch satellites from anywhere in the world to any orbit of the Earth or the Moon at any time.”

The assembly of the company’s first commercial rocket will be completed this month and plans to put the test satellite into orbit this summer.

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