Sir Richard Branson's space tourism company, Virgin Galactic Holdings Inc (NYSE:SPCE), said it will lay off an unnamed number of staff due to the difficulty in raising new capital.
Chief executive Michael Colglazier cited increased uncertainty in capital markets and higher interest rates as he said in a memo to staff that the company will be making "reductions in both staff and expenses" as it "streamlines" work outside its development of a new Delta class of larger spaceships.
The memo, which was also published on the company's website, came a day ahead of a scheduled earnings report after the closing bell on Wednesday, where more details are to be shared.
With the company having last month completed its sixth commercial spaceflight in the past six months, Colglazier said the Delta ships will be the focus as they will "drive the capacity, growth, and profitability of our company, and we must focus our efforts on bringing these ships into service".
The commercial flights so far by initial ships Unity and Eve have demonstrated the potential of the company's product but consumed "substantial resources", he said.
"We have successfully advanced both of these important efforts in parallel, and we have been able to support our funding needs along the way with access to capital markets.
"Recently, however, uncertainty has grown in the capital markets. Interest rates remain high, which adds pressure to companies who are investing today for profits that will come in the future. Geopolitical unrest continues to expand, and the combination of these factors makes near-term access to capital much less favorable.
"We are going to succeed in this environment by focusing our full company efforts on the safe, efficient, and successful completion of our Delta program that will allow us to create positive cash flow."