Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to Virgin Galactic's Fourth Quarter and Full Year 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

[Operator Instructions] I will now turn the call over to Eric Cerny, Vice President of Investor Relations. Please go ahead..

Michael Colglazier, Chief Executive Officer; Mike Moses, President of our Spaceline; Doug Ahrens, Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Our press release and slide presentation that will accompany today's remarks are available on our Investor Relations website.

Please see Slide 2 of the presentation for our safe harbor disclaimer. During today's call, we may make certain forward-looking statements. These statements are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties.

Many factors could cause actual events to differ materially from the forward-looking statements made on this call. For more information about these risks and uncertainties, please refer to the risk factors in the company's SEC filings made from time to time.

You are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call, whether as a result of new information, future events or otherwise.

Please also note that we will refer to certain non-GAAP financial information on today's call, please refer to our earnings release for a reconciliation of these non-GAAP financial metrics. With that, I would like to turn the call over to Michael. Please go ahead..

Good afternoon, everyone. Thank you for joining us. 2023 was incredible for Virgin Galactic, as years of R&D and flight test culminated in launching our Commercial Spaceline and successfully flying back-to-back monthly space flights, each delivering an exceptional experience for our customers.

Importantly, 2023 proved that each time we fly to space, we change lives for the better, and I'm incredibly proud of and thankful to our Virgin Galactic team for this successful year.

Since our inception, the vision for our company has been clear and consistent to make space more accessible to people around the world, and to do it in a way that's transformative and unforgettable. That vision, that dream behind Virgin Galactic came into sharp focus as we repeatedly flew spaceship Unity in 2023.

Now, in 2024, we're poised for even more meaningful accomplishments as we build the fleet of spaceships that will turn the dream into reality and long term success. It's a new day for Virgin Galactic.

We've entered Phase 2 of our company's journey, having grown beyond our R&D and prototype roots into an engineering, manufacturing and astronaut-driven consumer space company with an industry-defining product and customer experience.

At the top of the call, I'd like to share that our Delta class spaceships remain on track to begin ground and flight testing next year, and commercial service in 2026, and our balance sheet continues to be strong with cash, cash equivalents and marketable securities at just under $1 billion. Turning to the agenda on Slide 3.

I will start with a recap and overview of 2023 covering our launch of commercial operations, the incomparable life experience we are delivering to our customers; and related to that experience, the strong value and pricing opportunities we are seeing. I'll then revisit our strategy to scale the business and drive long term growth.

Because our Delta class spaceships play a pivotal role in our future. I've asked Mike Moses, President of Virgin Galactic Spaceline, to join today's call and dive deeper into how these next generation vehicles are being built and how they will accelerate value creation for the company.

Finally, Doug will share financial results for the year and the fourth quarter, thoughts on the size of the commercial space travel market and our growth model as we build out our Spaceport operations. Following our prepared remarks, we'll open the call to your questions. With that, let's get started on Slide 4.

We officially commenced commercial operations last year with great success, proving that we can execute as a commercial spaceline flying safe, regular and repeatable missions. We've created a customer experience that sets the industry standard for years to come. The comments from our newly minted astronauts have been overwhelmingly positive.

To hear them describe it, the customer journey delivered by Virgin Galactic from preflight activities and immersive training to the spaceflight itself is perhaps the most meaningful experience of their lives.

We're not only taking our customers to space and back, our customers tell us it's an incomparable life moment, and we're seeing what's called the overview effect in action, where the experience of seeing the Earth from Space literally changes you.

It's a thrilling and overwhelming sensory experience, to be sure, giving everyone who does it the adventure of a lifetime, but it's also the visceral realization of the vastness and the brilliance of the Earth and the enormity of the human endeavor that brought them to this point.

This is a life journey, and it matters like nothing else people have experienced. Because we take off and land from the same spaceport runway, our astronauts can have their family and their friends share in this journey, and that is just wonderful.

They watch their loved ones rocket into space, see them floating in awe above the planet, and then cheer as they gracefully glide back down to the spaceport.

The reunions and the hugs are deeply emotional, because we thoughtfully integrate family members and friends into the scheduled activities and overall experience, the days at Spaceport America become a shared experience that is completely unique and deeply meaningful for everyone involved. On Slide 5.

For our last flight, GALACTIC 6, we hosted our largest crowd of friends and family since launching commercial service, and the energy was undeniable.

We host this group for the benefit of our customers, but this service also enables invaluable sharing and testimonials via word of mouth, which will be of great value to the company when we reopen sales ahead of the Delta ship's arrival.

In addition, many of our flown astronauts have become ambassadors for our product, which will draw more people to the adventure and discovery associated with our spaceflight experience. Our astronaut testimonials are very moving, and I encourage you to go listen to our more recent ones from GALACTIC 6 on our social channels.

Since May of 2023, we brought 24 people to Space, bringing Virgin Galactic's current total to 32 astronauts. This is almost 5% of human history's total number of astronauts, and we will surpass the 5% mark with our next mission GALACTIC 7 later this year.

All this was done with our first prototype ship, and these numbers will be dwarfed as we scale up the Delta class fleet. Everything I just discussed, how we deliver successful flights, along with the superlative customer experience has tangibly demonstrated the appeal and the value of being a Virgin Galactic astronaut.

And our experience with actual customers has reaffirmed the company's strong market opportunity. As a practical example of this market opportunity, we have sold recent openings in our manifest at a market rate that is substantially above our historical pricing.

Our next spaceflight, GALACTIC 7, will have a blended manifest of researchers and private citizens, and we expect the revenue for that flight to exceed an average of $800,000 per seat. With a current backlog of approximately 725 future astronauts, new sales are not planned to open until we are closer to the launch of our Delta fleet.

However, we have a limited number of house seats that we have made available to private astronaut referrals from our future astronaut community. We have moved the entry price point of these private astronaut seats from $450,000 to $600,000, in line with the entry level price per seat of our research flights.

We believe these prices continue to reflect outstanding value for the product and lifetime experience we are delivering. And as Doug will share in a moment, we believe there is a large and robust addressable market at these price points.

Before I hand the call over to Mike and Doug, I want to clarify and reaffirm our vision and growth strategy for the company. Moving to Slide 6. let's start with the building blocks of our core business model. We've laid out the unit economics of a single Delta ship.

With 6 seats, these ships can deliver a revenue per flight of $3.6 million at current pricing levels. We are targeting each Delta ship to average 8 spaceflights per month.

Allowing for annual maintenance cycles and an appropriate amount of redundancy, we expect each spaceport will be optimized with a fleet of four to five spaceships and two motherships. This set of assets should enable a range of 300 to 400 spaceflights per year per spaceport in steady state operation.

To illustrate, a spaceport that operates 300 flights a year at $3.6 million per flight, generates over $1 billion per year in revenue from the spaceflights themselves. But that's not all that we expect to have going on at a spaceport.

As we've demonstrated with our early flights, witnessing a spaceflight in person is an extremely compelling experience, not only for friends and family, but also for people who are interested in Space and Aerospace technology in general.

As we approach a flight cadence that is closer to daily than weekly, we expect many people will wish to be part of that experience. Some of those people will eventually become astronauts themselves, and some will be satisfied with being part of human spaceflight from the ground.

All of them, however, will have an outstanding experience during the day at our spaceports, and this can be accomplished at prices that are much less than our spaceflights. This larger volume of attendance at our spaceflights is very important to the communities where we operate.

On top of the high wage jobs generated directly and indirectly from our operations at the spaceport, additional jobs and positive economic impacts should flow into the community as all the people in attendance during their spaceflight days spend time and money within the surrounding areas.

At a macro level, it is this fully-utilized spaceport that is the primary economic engine for both Virgin Galactic and our communities. It will be a compelling public-private partnership that we're working to first scale-up and realize at Spaceport America in New Mexico.

We will then take that fully-utilized spaceport model to governments and communities in other parts of the world that wish to develop a local Space economy.

I want to note that the upfront infrastructure we are now building for our Delta class ships, including our final assembly spaceship factory in Phoenix, is planned to support this future expansion. This is where we expect to drive excellent contribution margins and this is where we see significant upside potential in our business model.

Once our upfront infrastructure is in place, we expect to lean into the profitable expansion of our fleet.

While the capital we have on hand is sufficient to bring our first two ships into service, we do expect to bring on additional growth capital to fund the assets needed, primarily additional spaceships and motherships to expand our business at an appropriate rate.

With high margins and short payback periods on additional spaceships and motherships, we forecast the returns on this growth capital, when deployed, to be very attractive and value accretive to the company.

Our primary effort right now, however, is to remain laser focused on completing the upfront design, build and test work so we can launch our Delta fleet and move into cash flow positive operations. With that in mind, I'll hand the call over to Mike Moses, President of Virgin Galactic Spaceline for an update on our Delta ships..

design; build and assemble; and test. As I've highlighted, Delta is based on the learnings of Unity, and that is the most relevant fact that drives our confidence. In the design phase, we know that Delta needs to fly the same way as Unity. It has the same shape or outer mode line, flies through the same environment and follows a similar path to Space.

Thanks to Unity's flights, our designers already have the end, well-defined. In the Build and Assemble phase, I just highlighted the key changes that drive confidence there. The digital models, integrated major sump assemblies and development test equipment that allows us to check components before they go on the ship.

On Pages 8 and 9, you can see the continued progress we are making on the buildout of our spaceship factory. In the test phase, we again build off the foundation of Unity. We are not flying into new and unknown territory. We need flight testing.

But for Delta, we are looking at the performance of what has changed, not learning new things on each test flight, like was needed for Unity. In the test world, this is more like regression testing as opposed to new envelope testing.

Finally, for those with a more detailed interest in how our spaceships are being built, Page 10 shows examples of tools that Qarbon Aerospace is using to build the BMI composite parts. These tools work much like molds that allow us to build and cost effectively replicate parts for multiple spaceships.

The carbon fiber parts are laid up into these tools, and then cured in pressurized ovens called Autoclaves that are located at Qarbon's facilities. Page 11 shows the Delta flight deck simulator we have recently installed at our engineering headquarters in Orange County, California.

This critical test asset supports the evaluation of our cockpit layout and human control interface, evaluation of flight controls, and updates to pilot procedures and checklists. It has taken a tremendous amount of expertise and experience to arrive at this exciting point in our trajectory.

Every flight we have taken, every lesson we have learned, every leap forward we have made, all have brought us here. What we are accomplishing with Delta and the scaling of Virgin Galactic is nothing short of amazing, and I look forward to sharing more details as continued progress is made.

Now I'll hand over the call to our Chief Financial Officer, Doug Ahrens, for a financial overview..

Thanks, Mike. Good afternoon, everyone. Turning to Slide 12 and our financial results for the fourth quarter. We generated revenue of $2.8 million, driven by commercial space flights and future Astronaut membership fees.

Total operating expenses were $117 million compared to $154 million in the prior year period, primarily driven by lower R&D and SG&A expenses.

We reported a GAAP net loss of $104 million compared to a net loss of $151 million in the prior year period, with the improvement driven by lower operating expenses and an increase in interest income from our marketable securities.

Adjusted EBITDA was negative $84 million in the fourth quarter compared to negative $133 million in the prior year period. Turning to Slide 13. For fiscal year 2023, we generated revenue of $6.8 million, driven by commercial space lights and future Ascena membership fees.

Total operating expenses were $538 million compared to $502 million in the prior year. We reported a GAAP net loss of $502 million compared to $500 million in the prior year. Adjusted EBITDA for the year was negative $427 million compared to negative $431 million in the prior year.

Free cash flow was negative $114 million in the fourth quarter compared to negative $135 million in the same period last year. Our free cash flow was better than guidance due to variation in timing of payments to suppliers. For the year, free cash flow was negative $493 million compared to negative $397 million in the prior year. Moving to Slide 14.

Our balance sheet remains strong with $982 million in cash, cash equivalents and marketable securities. In 2023, we generated $484 million in gross proceeds through an at-the-market or ATM equity offering program. We did not utilize the ATM in the fourth quarter. Moving to our projection.

Revenue for the first quarter of 2024 is expected to be approximately $2 million. Forecasted free cash flow for the first quarter of 2024 is expected to be in the range of negative $125 million to $135 million.

Michael mentioned earlier, the strong value being delivered to our customers, and as shared, we have updated our private ascent pricing to align with our research pricing at $600,000 per seat. I'd like to now discuss how we view the size of the commercial space travel market that we are pursuing.

We've triangulated a few sources of research to help us better understand the total addressable market, or TAM, leveraging a 2021 Jefferies report, a 2023 Credit Suisse report and our own proprietary data, we have estimated a number of individuals that have both the desire to fly the space and the resources to do so.

Using conservative assumptions, we believe the TAM for private astronaut space travel is approximately 300,000 individuals growing at an estimated annual rate of 8%. Putting that market opportunity into context, one fully operational spaceport, supporting around 2,000 aspirants per year would represent less than 1% market penetration.

This type of market analysis, combined with the tremendous customer feedback we're seeing from the spaceflight experience shows the clear opportunity to keep expanding our fleet of spaceships and other ships with the goal of adding multiple space ports around the globe.

In the prior earnings call, we stated our ability to achieve positive cash flow with two Delta class space ships. We have allocated sufficient capital to bring them into service. But our growth aspirations do not stop there. We plan to continue to expand our fleet and fill additional space sports.

The onetime capital investment planned for 2024, which includes tooling at suppliers and the opening of our spaceship assembly factory in Arizona will give us the manufacturing capacity needed to continue building additional space ships at relatively low incremental costs. Let's now discuss the economic model behind the fully operational spaceport.

We believe the most effective utilization of the spaceport will occur at 300 to 400 flights per year. If we were to assume average ticket pricing of $600,000 for now, we would generate approximately $1.1 billion to $1.4 billion of revenue per space board annually from space flights.

The space ships and motherships are the high return, quick payback assets that are expected to drive the outstanding economics for each Spaceport.

Because of the attractive economics just described, at some point in the future, we would expect to bring in additional growth capital to acquire additional spaceships and motherships to revenue-generating assets that increased profits. We forecast returns on this growth capital, when deployed to be very attractive and value-accretive to the company.

For now, however, having recently rightsized company, we are prudently managing our resources and focusing the organization on good execution to bring our first Delta class spaceships into service. I will now turn the call back over to Michael..

Thanks, Doug. To recap the key takeaways from today's call, the bold dream of commercial space flight was realized in 2023 as we officially launched our commercial space line with six flights in six months, demonstrating the Virgin Galactic spaceflight system is designed for safety, reliability and repeatability.

Our astronaut journey is delivering an incomparable life experience that is of great value to our customers. We see positive indications for both pricing and the overall potential size of the commercial space travel market.

2024 marks a new phase as we move past our R&D and prototype roots and are now advancing the development of our production space ships with ground and flight testing expected to commence in 2025 and entry into service expected in 2026.

We continue to pursue our high-growth business model of creating fully utilized space ports with plans to first scale operations at Spaceport America with a fleet of four to five spaceships, followed by expansion to additional space ports in compelling locations. With that, we'll turn to questions.

Operator, we're ready to begin the Q&A portion of the call..

Thank you. [Operator Instructions] Your first question comes from the line of Greg Konrad with Jefferies. Your line is open..

Good evening..

Hi, Greg..

Maybe just to start on CapEx, I mean guiding to $40 million to $45 million in Q1, I think, you spent $18 million in Q4 and $44 million in 2023.

How do we think about the ramp there? And how much of that is higher activity? And then also just given accounting with R&D, how much of that is coming over from R&D, just kind of thinking about R&D spend for 2024?.

Yeah. Thanks, Greg. Yeah. You've noted the trend in the shift. What's happening here is we've shifted from this heavy R&D phase as we've gone through the non-recurring engineering into the building of capital assets. It starts with tooling and the factory and then parts fabrication and so on.

So we're seeing a shift because we're moving into this next chapter where we're building these revenue-producing assets. So you're going to see that trend continue into 2024 and in 2025, where you'll see more CapEx than R&D. We don't guide the split specifically, but you will see the majority shifting to CapEx.

We have said in the past, and this still stands true that if you look at the total cash spending, we do expect the average spend for '24 and '25 to be lower than it was in 2023, and that's because of this shift that's happened, where we are now moving through the addition of these assets that a lot of this happens in 2024 and then it starts to ramp down because we have these assets in place and now can move into the production of spaceships.

So that hopefully gives you some color, Greg..

That helps. And just in terms of spaceport, I mean, you sized each spaceport at capacity of four to five spaceships. And in the past, you've talked about Delta production capacity at six per year. So I mean, it seems like you could fill up the first one fairly quickly.

Any color around when you would look to add a second spaceport, and any initial conversations, or when those conversations need to happen with a potential location?.

Sure. We just kind of harking back to the last call. One of the big advancements we've seen from Delta was to be able to turn those ships on a twice a week basis, well, more than our Unity ship, of course, but even stronger than we had originally put forth.

And so, therefore, we need, functionally, about half the number of spaceships at every spaceport going forward. So, as you note, the factory capacity that we built when we were thinking these could turn on a weekly basis versus twice a week, gives us, I think, plenty of capacity within the factory to build the ships out.

To your specific question on next spaceport generally, that's about a five-year process. And so 2029 seems to be the right place for a second spaceport. I note there are many places that we could go in the world. We can go to other places in the U.S.

We could also functionally double our infrastructure at Spaceport America and kind of run a twin operation there if we so chose. So there's many places we can have that next spaceport come forward, and then ideally, more following from that. But five years out from today is about the right target for that..

Thank you. I’ll leave at that..

Your next question comes from the line of Oliver Chen with TD Cowen. Your line is open..

Hi, Michael and Doug. Delta class has a really nice contribution margin once it's running. I would love your thoughts on upside or downside to the 75% contribution margin on Delta class.

And second, in terms of revenue modeling, as we think about the ramp of customer deposit liabilities on the balance sheet, Doug, any thoughts on how we should look to model that? And then third, the GALACTIC 6 experience that we had really showed a lot of differentiation of the product.

How are you thinking about competition in your pricing relative to competition and the different kind of experience that you offer as well? Thank you..

Thanks, Oliver. This is Doug. I'll take the first two questions and then have Michael comment on the third. So regarding the contribution margin, 75% that we've stated before, that was actually based on a lower ticket price than we're talking now. So that was based on the $450,000 ticket price.

And that was a full Delta class ship and a variable cost of around $400,000. So that was giving us a contribution margin of greater than 75%. Now with ticket pricing at $600,000, that contribution margin will expand because the variable cost doesn't change. We are just bringing in more revenue per flight.

In terms of the customer deposits, we model those being in the area they are now, which is around $100 million until we reopen ticket sales in the future, and we've talked about that on the call. But until then, it would be fairly constant.

But in the future, just when we think about capital planning, we are fulfilling our CapEx requirements and our operational expenditures without any plans to utilize those deposits. Those are set aside. So our CapEx and so on is funded through the other money we have on the balance sheet and any future growth.

So that's how we think about customer deposits.

Michael on GALACTIC 6?.

Yeah. I'll talk -- I think Oliver, your question is both on competition and relatedly pricing. It's very difficult to compete with us. There's a huge technology and capital moat around human spaceflight, right? That's why it's, of course, previously only been a few governments that could afford to get there.

So really, where SpaceX and governments are sending people further out. The only people doing anything in our competitive set is the Blue Origin company. And I don't have privy to their specific pricing anecdotally from the media, as they seem to have been pricing greater than $1 million as a base.

So that's, I'd say, the only real kind of comparative from a competitive standpoint. So then I look internally and in anything that is a luxury or consumer offering, you want to look at the price-value relationship, and the value has to be there to drive price.

So we have had -- I think, everybody is tracking with us, when we've had very recent openings, right? We've flown, had openings on some of the flights that we've just done. And when that opening comes up, we have basically sold that opening at a market available price. That's been very close to $1 million.

And that's probably in line with what you're also seeing elsewhere and when you can fly kind of right now, that's where the market has shown for something right here.

So then the question is, well, how is the value at that price? Because we've flown people that have been waiting for 17 years that were at $200,000, and we've flown people that are closer to $1 million.

And I can tell you, having spoken with everyone, the value of what we are creating is so extraordinary that the price part of that equation is kind of diminished or minimized as an impact. So we feel that the value is so high. Our price value is good. We feel great that we're delivering enormous value at these recent prices we've been doing.

I noted, I think Doug noted too that while we don't have sales open right now, we do maintain some house seats on our own, if we get a referral from our founders or customers, we can sell a few of those seats at the end of the queue. And we've moved those seats to $600,000, in line with our research pricing.

I don't expect when we open up sales going forward to be going lower than that, I think the price-value maintains pressure on the price point more towards the upper angle of that. But that's where we sit right now.

And again, I just don't think it's easy for people to come into this market, compete with the amount of upfront technology investment and diligence that has to be done. It's a very complicated endeavor..

And one follow-up, Michael. The spaceport experience, in many ways felt like being in a movie, what are your thoughts for the community engagement part? And what have been your learning so far from spaceport and what you do there with the guests before and after and also as you think about hospitality more broadly? Thank you..

Thanks, Oliver. You heard me mention, we had a larger number of friends and family and invited guests at the last spaceflight, still, I'd say, small versus what the capacity of that kind of spaceport wants to look like on a flight day. And the more we bring in, the better this experience is for everyone. We're able to take all the groups that come.

And on the day before the flight actually break people and give a fairly robust tours of the spaceport itself, meet with leaders within our team, understand the technology, understand the incredible rigor that our maintenance and technical operations, our pilot teams, our mission control teams put into this.

And it just builds the momentum and the excitement, the more context we provide people. So that's like one day in advance. And obviously, we can program one or two days in front of that as we choose to going forward.

And then, on the day of the flight, having that large group around that has that context just adds energy, as you experienced to everyone that's there. I think, we're just at the tip of the iceberg of what that could become.

But at a practical level, we have to get our spaceships built so that we can bring the spaceflights and do that on a multiple times a week basis. And then from there, I think we can add this ancillary -- nontrivial, but ancillary growth on top as we bring more people in. You mentioned hospitality.

Obviously, that means people will need some place to stay, some places to eat and likely we'll want to do other things. That's a big part of why, and in this case, the state of New Mexico has been so excited to have us come and get the business scaled because that starts to drive benefits that have multiplier effects throughout the community.

So we definitely will pursue growth in those angles. But first things first, let's get the ships built and then we can go after scaling the rest..

Thanks a lot. Best regards..

Your next question comes from the line of Myles Walton with Wolfe Research. Your line is open..

Hi. Thanks. Good evening. I was hoping I first touch on GALACTIC 6 and the -- it doesn't sound like there was a delay implication from the alignment pin departure for the GALACTIC 7, which is still scheduled for 2Q.

Is that correct? And have you already remediated anything with the FAA?.

I'm tracking this one, obviously, closely. But since we've got Mike here, Mike, I'll throw the question over to you, and nice to hear from you, Myles, by the way..

Yeah. Thanks, Michael. So Myles, yeah, I can speak to this. I've actually been sitting in on our regular status updates to the FAA. So we are making really solid progress.

We've done a fair bit of testing on the ground, and that's actually really allowed us to close out most of the actions in the investigation, and we could recreate the circumstances where that pin came free and kind of narrowed down the conditions that could have caused that.

So we're in the corrective action phase to kind of enhance the robustness of the retention mechanism out of the discovery phase kind of into the reporting side. So we don't anticipate any impact on GALACTIC 7 at all for quarter two and the investigation has been going really well with the FAA in partnership..

Okay. And Mike, while I have you, thanks for the outline of sort of the architecture Delta , where it's different, and the testing profile.

Can you put a little more meat on the static testing? And I imagine getting over that hump will be pretty critical to defining the fatigue characteristics and getting you to the confidence in those inspection profiles, which basically is the game changing for the economics.

But when specifically does that static testing occur? Is it in parallel to the flight testing? Is it basically by the end of '24, you'll have a good sense?.

Yeah, Myles. So I think it's -- that's a really good, deep question. I highlighted the significant benefit of a static test article into inspection definition, but it also clearly validates models, allows you to look for manufacturing process improvements and things like that.

So it has a lot of payoffs besides just inspection, having an article that you're able to kind of validate your models on, you can also check out your instrumentation, data gathering systems and validate a lot of other things as well. And so, we'll run those in parallel.

We'll have a static test article built up and installed down here in Orange county at our Engineering Design headquarters. So we get close integration with our test and engineering facilities here.

And we'll have some of those parts that we want to make sure we clear, before we get to certain milestones in flight test and others that will occur a little bit later on as it relates to lifetime and cycle testing.

So not a specific answer for you on exactly when that is up and running, but the article will be up and running in 2024 and ready to do testing. And again, some of that will be subcomponent. But what we're really looking forward to there is the major subassembly testing, which will be later than that..

Okay. Thanks, again..

[Operator Instructions] Your next question comes from the line of Sam Struhsaker of Truist Securities. Your line is open. Your line is open..

Hey, guys. On for Mike Ciarmoli, this evening. Thanks for taking the question. I was just curious if you could give any more detail on sort of the quantity of those referral seats that you guys mentioned, that's allowing people to enter the queue if you're willing to do that.

And then also, I was just hoping for some clarity on -- you said you had these openings that came up on recent flights that you sold at market value. What was the motivation behind kind of selling those as new seats versus pulling in someone from the queue to fill those spots? Thanks..

Sure. The first question, Sam, is there is our -- we don't have sales open. So they are in smaller volumes, single-digits, low-double digits over the course of time, more in response, as opposed to proactively going out. So that's just kind of there as almost a service to our existing base.

The question you had on when we have a seat opening, what have we done? We obviously have had a large number of amazing future astronauts, many with us for 15 years or even a little more. And before we reopened sales back at the $450,000 point, we took the opportunity to move all of those people forward into our queue, into the manifest.

So, for instance, I might have signed up at number 50 in line. And, Sam, you were number 51. And if it were for whatever reason I had to drop out, we would have moved everybody up into my space. And so some people moved up quite a bit at that time.

And at that time, we communicated with our astronaut, future astronaut base that we were going to do that once. And then if there were openings that came up in the manifest along the way, that we would bring those forward more at a market rate. But we would give kind of first nod within the community.

And that's what we've been doing there, is while we're no longer continuing to move people up, we don't move people back either. We are giving that opportunity. And so, we asked to the existing base of future astronauts who would be interested if an opportunity presented itself to fly earlier, and it would be at a premium price if that happened.

And that's where we built that list up. And that's where people have been, the people who have flown at those higher rates, at the earlier times have come from our existing base..

Got it. Thank you..

Your next question comes from the line of Kristine Liwag with Morgan Stanley. Your line is open..

Hi. This is Gabby (ph) on for Kristine. Thanks for taking the question.

So I was just curious if you could provide some color on if there are any design or manufacturing changes required to either the mothership or spaceship as a result of the pin detachment last month? And if so, does this inform any design changes to the Delta class as you progress through development? Thank you..

Yeah, Gabby. So no changes to the design on either the mothership or the spaceship. Again, the pin issue we had posed no safety threat at all during the flight; and actually, other than having fallen away at the end, performed its function. It's there to hold the ships in alignment, while we're both meeting on the ground and while we're flying.

So as long as we're attached, it did its job as it should. Clearly, we don't want it to fall away, but the fact that it did, meant it performed its function.

So we're looking at a pretty minor change to the existing design just to give it some extra retention capability, but nothing that would be anything of significance to either motherships or spaceships..

Thank you..

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