A pause in investment commitment to Virgin Galactic


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The heat of competition: Virgin Galactic’s Arab investors have decided to hold off further commitment to the project until the investigation of the SpaceShipTwo crash is completed.

The backing of deep-pocketed Aabar Investments, run by the Abu Dhabi government, may be crucial to Virgin Galactic as it struggles to recover from the accident, which killed one test pilot and left another seriously injured. “As an investor, Aabar is concerned of course. It is a challenge – nothing can be decided until investigations are over,” the source said, declining to be named because of the sensitivity of the subject. “For now, it is a wait-and-watch situation.” Asked if Aabar was still committed to Virgin Galactic, the source said only: “There is time to make an assessment of the future strategy.”

This is hardly a surprise. Nor does it guarantee an end to Richard Branson’s company. What it signals is a recognition that Virgin Galactic has had a serious problem and must demonstrate that it can fix that problem before it will regain the trust of its investors.

3 comments

  • Edward

    Before Orbital and SpaceX successfully launched payloads to the ISS, there were many voices expressing doubt that private business could do what only nations, with their immense resources, have done. Both of last week’s accidents, Orbital’s Antares and Virgin’s SpaceShipTwo, have brought back the critics. The way that these two companies handle the aftermath will determine the trust of not only investors but also of the general public. In order for the commercial space industry to continue operations, it must keep the trust of the American people.

    SpaceX, Blue Origin, XCOR, and maybe even Google’s X Prize also depend upon the correct response to these two setbacks. They all have a stake in the proper management of the perceived and actual risks and their mitigation. If the Virgin/Spaceship Company/Scaled Composites/Sierra Nevada group that is responsible for SpaceShipTwo can maintain public, investor, and government confidence, then this industry is likely to become strong and contribute to our exploring and pioneering space.

    The FAA was formed in the 1920s when WWI pilots used their war-surplus airplanes to barnstorm joy rides for the American public and to entertain the public at air shows. Too many wing walkers were falling off and pilots and passengers were getting killed in crashes, so the American public demanded change. Since it was too late to stop these private pilots, the government chose to regulate them.

    The good news is that this agency has lead to safety improvements, and between it, the NTSB, and NASA, they should be able to maintain improved safety in spacecraft operations, too. These organizations have become very good at this general task, and although we are likely to see more accidents, I suspect that, with our better technology and these agencies’ honed methods, safety will improve much faster in spacecraft than it did in aircraft.

    I see this as a short term crisis, over the next decade or two. Eventually the public, including investors, will realize that there is much more benefit in going to space than the risks taken (e.g. private companies have incentive to improve efficiency and effectiveness, including safety, whereas there is not so much incentives for governments to improve). Eventually, accidents will become calls for improvement, not calls for the end of commercial space, just as happened with air travel and even automobiles.

    We still fly, and we still drive, so we can be tolerant of risk when the benefits outweigh them, and we are willing to invest-in and buy-from businesses despite accidents that happen in producing, delivering, and using goods and services.

  • Pzatchok

    I do believe that the general public wants us to be able to go to space for short entertainment options.

    But I do not believe they want the Branson vomit comet ride.
    Do you really think rich privileged people are going to want to spend money to have other rich peoples vomit fly around the cabin with them and falling on their heads when they get back into gravity?
    I just can not see Paris Hilton going for that flight.
    And who will clean it up while in space anyways? Not everyone will hit that barf bag on time and target.

    Spaceship two can never reach orbit and if it somehow does it will never have a way back.

    But I can see them spending a few more dollars to spend a week in a private space station for a little fun with a few friends.
    Or drug and chemical companies sending a few lab techs up to conduct experiments and produce a few special products.
    Its a waste for NASA to be using multi million dollar astronauts on grunt lab work. Or on station maintenance and construction.
    Its time for space to be opened up to trained blue collar workers and not over trained and educated people they call astronauts. It shouldn’t take three degrees to get to work in space.

  • Patience.

    There was a time when only the most educated were doing foundary work, because they were figuring out how to do it. That’s where we are with work in space. If things move apace, I expect we’ll see ads for trade school graduates to work orbital jobs in our lifetime.

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