Richard Branson’s Virgin Galactic and Jeff Bezos’s Blue Origin: the new space race?
Branson has declared space open for business. Is that still a pie in the sky?
Virgin Galactic’s successful test flight last weekend enabled Richard Branson “to claim the crown of the first billionaire to make it into space”, said James Phillipps on Citywire – beating Amazon supremo Jeff Bezos’s Blue Origin venture by a matter of days. “The battle of egos” between the pair, and Elon Musk’s SpaceX, has created “a fresh wave of interest in the commercial opportunities beyond Earth”.
And the Branson coterie has been quick to capitalise on it. A new investment trust, Seraphim Space – chaired by former Virgin Galactic president Will Whitehorn – floated in London this week, providing “the first actively managed way” for the average investor to gain exposure to potentially “stellar” returns. Punters seemed very willing “to explore a new frontier”, said Naomi Ackerman in the London Evening Standard. Shares in Seraphim, which is backed by Airbus, climbed by 5.5% in early trading.
Let’s not get carried away, said Matthew Field in The Daily Telegraph. Branson might have achieved “weightlessness” as he skirted the edge of space, but shares in New York-listed Virgin Galactic fell to Earth with a bump this week on news that the company needs to raise another $500m of equity to fund its commercial launch next year. The 14% plunge was the latest shock for shareholders.
Branson and Bezos see their flights “as the beginning of a new stage in commercial space travel”, said Sarah McBride on Bloomberg Businessweek. But Virgin Galactic has been a pioneer for the space industry in other ways too. In 2019, it went public after merging with a special purpose acquisition vehicle (Spac) – “a then-obscure financial tool” that has since been adopted by a host of “risky companies”. Branson’s maiden flight may have validated Space Spacs, but it has also helped launch a dicey trend.
Virgin aims to take tourists to the edge of space “at a rate of more than one flight a day”, said Richard Waters in the FT. More than 600 people have so far put down an average of $130,000 to fly. “However, with room for only four passengers on each flight”, there’s “a serious shortage of seats in the short term”, and no firm timetable for when it will scale up commercial operations.
Galactic’s $8.3bn valuation may be hard to justify, said Alex Brummer in the Daily Mail. But fair play to Branson: his “space escapade” is the culmination of a long obsession. A pity that it coincides with such a parlous situation in the terrestrial air industry on which our economies depend. Branson’s Virgin Atlantic, like all the others, is foundering. Arguably, “his most important mission isn’t in outer space but over the Atlantic”.