Q1 2022 Virgin Galactic Holdings Inc Earnings Call
Investment program are currently preparations for commercial service and setting up the business to operate at scale I look forward to sharing updates on all of these priorities with you today.
Go to slide four in today's agenda.
I'll start with an update on the enhancement program and our flight schedule. All led by an update on our future fleet and then I'll turn to our commercial strategy.
Finally, I'll hand, the call over to Doug who will provide a financial review of the quarter.
Moving to slide five our vehicle enhancement program.
We continue to make good progress on the enhancements to our current fleet, including our mothership ease in our spaceship unity.
As a reminder, these enhancements are designed to significantly improve the durability and reliability of these shifts enabling a higher frequency quite right for her service.
We've outlined the details of this work in previous earnings, but let me give you. One example of what we've recently completed.
These enhancement program includes modifications to the center wing and large pipeline to enhanced durability and a high frequency commercial settings.
Our launch pile on the mechanical attachment the hostess station and passive Aaron electricity for the mother ship to the spaceship until this patient was released.
We are implementing a new pilot design that attaches to the mothership win with a four point construction rather than the three connection points, we had previously.
If you are following the presentation on slide five you'll see an image with the launch of <unk> was installed in April .
It was a major milestone for the program and various other enhancements continue to progress.
What we are doing on VSS unity is also moving ahead, we continue to expect the unities enhancements will be completed in advance of the scheduled <unk>.
Last quarter, we shared that we are closely monitoring increased supply chain risk and are proactively working to mitigate issues.
Like many companies around the world, we are experiencing elevated levels of supply chain disruption.
Do you have an outstanding team dedicated to managing that is increasingly complex environment and they are actively working to address and mitigate the supply challenges since they rise.
We are also growing our talent base submit a constrained labor market.
While we are having much recruiting success, our talent growth rates have not kept pace with planned ramp up.
These combined labor supply chain challenges are bringing up the best of Virgin Galactic <unk> innovation and resource for us and we've been able to mitigate most extension risk as they arise.
At this point, though our projections on high rebates and our forecast of certain long lead material deliveries suggest we may need additional schedule contingency.
For this reason we are shifting the expected commencement of commercial service from Q4, 'twenty to Q1 of 'twenty three.
Turning to slide six and our flight update.
Our commercial flights expected to startup, Italy, we anticipate VSS unity to return to space in Q4 2002 as part of our planned post enhancement period flight test procedures, we expect our second spaceship VSS imagine will make its debut test flights of space from Q1 of 2023.
Following several revenue generating testified expect VSS imagine to commence private restaurant service midway through 2023.
Testing will remain critically important as we design and build a new spaceships. The mother ships in March we announced the promotion of Kelly Latimer to director of flight test.
Veteran pilot has been with the company more than six years, she brings a wealth of experience having.
Having previously worked on system development and aircraft design, a boeing or an <unk>.
20 years of service with the U S Air Force.
Director of flight test she will oversee the conclusion of our test program for unity and imagine while working in parallel to design a test program for the Delta patients next generation partnerships are excited to have Kelly in this important growth.
When the entity would imagine achieve their planned cadence for commercial space flights in 2023, we expect a flight space about three times per month, which will be an incredible achievement.
But the market for human spaceflight is large growing and a real step change in our ability to meet the demand for experience will come with our future fleet.
Now, let's turn to slide seven and our manufacturing and design to date.
As we shared previously the delta classes, our production model spaceship biscuit.
Which we are designing to fly once per week.
The Delta Fleet next generation medicines are evolutions that are current vehicles.
Our than 17 years of research and development has enabled us to build space vehicles that are differentiated and elegant.
We've proven that our technology works and that our spacing design deliberate one of a kind consumer experience. It was intended to do.
For our next generation fleet, we have.
Adjusting the existing design of our ship to make it faster to produce and easier to maintain support faster vehicle turn times.
As we move towards scale, we are evolving from a primarily in house vertically integrated manufacturing process to one that leverages tier one and tier two suppliers for major sub assemblies, such as the win fuselage.
A key goal of our strategy is to utilize the nationwide aerospace ecosystem to excess pre existing innovation new technology in existing highly skilled labor pools.
For example by working with new tier one suppliers. We are now able to incorporate a more efficient high temperature composite that will reduce weight and improve production lead times.
That wishing these third party relationships is critical to how we scale our business.
There will be long term high dollar value of contracts and we are working through a methodical and competitive process, we identified onboard partners to form the backbone of our future supply chain.
I am pleased to share that we are making good progress on selecting these important partners.
Turning to slide eight in March we hosted a supplier conference at our engineering and design headquarters in Orange County, and our manufacturing facility in <unk>.
As well attended by tier one and tier two suppliers, who expressed interest in working with us on the sub assemblies for our Delta fleet.
Caliber of available and interested suppliers is excellent.
Thats, great confidence in our path forward.
We've now issued RFID and are working through a meticulous process to identify the primary suppliers we work with.
Turning to slide nine.
We are deploying a digital twin architecture that underpins our Delta class next generation mothership schedules.
This approach enables a comprehensive digital database for each vehicle, which captures the vehicle system requirements and Nicole design as well as manufacturing and operations data to create a digital thread for all production activity across the supply chain.
This digital thread enables seamless integration with our partners, allowing for real time collaboration strong governance, and an increase in production efficiency safety and reliability.
A key benefit of this approach as it allows our in house team focus on the complex and critical elements. There are core to our intellectual property around design and engineering and final Assembly.
We continue to progress design and location choice, New final assembly facility or a delta class B ships.
The facility to be operational in late 2023.
We're planning for this facility to eventually hundreds of Virgin Galactic technicians, and engineers with production capability of up to six patients per year.
We look forward to sharing an update on this soon.
Summary, we've made good progress this quarter towards establishing a long term manufacturing model, we feel confident that our manufacturing approach will improve our speed to market help us minimize supply chain disruption and realize meaningful efficiencies.
Turning to slide 10, our commercial strategy.
In February we announced Blair rich as our President and Chief business Officer, commercial and consumer operations.
In the near term Blair and her team are focused on three top priorities sales.
Customer journey and experience.
Building, our global brand.
These in turn.
Ticket sales continue to progress well and we're seeing strong uptake across our product offering. This includes single teeth as well as multi and full flight vials.
We remain on track to have our first 1000 committed astronauts ready for the launch for service.
Currently have approximately 800 future astronauts oxy.
Our purchase sales is high touch and personalized is proving to be extremely successful converting consumer interest in the ticket sales.
These early sales are also helping us build a valuable bank customer data and insights that will help us refine and scale, our sales process and their business expense.
We shared before in one of our key Differentiators is our end to end customer journey starts with point of sale and since far beyond the space by experience as part of our astral out of them.
The multiyear anticipation of our flight intentional.
Signature credit from customer experiences will interpret attract potential customers.
On building our brand three resume space flights are enhancement period.
Expect to see a spike in global engagement as we saw a previous flights.
We've shown how effectively we can use it milestone five minutes to capture the imagination of millions of people at the attention of global media.
Which in turn built our global cultural relevance and gave us a grandstand increases affinity towards <unk>.
I'll now turn the call over to them for an update on our financials.
Thanks, Michael Good afternoon, everyone.
The slides 11 and 12, let's.
Let's review our financial results for the first order.
I generated revenue of $398000 in the quarter to that primarily by future asthma membership is associated with your ticket sales.
Expenses for the best quarter of $92 million compared to $81 billion in the prior year period.
The increase in expenses is primarily attributable to hire manufacturing labor seven as we're progressing through the <unk>.
Dot net loss for the first quarter was $93 million compared to a loss of $131 in the first quarter of 2021.
Hello, net loss is primarily due to there are no longer being any remaining won.
There being no associated change their value of those months flowing through the income statement.
Adjusted EBITDA with a negative $77 million compared to a negative $56 million in the prior year period.
Free cash flow was negative $68 million compared to negative $50 million in the same period last year.
Increase spending was primarily attributable to growth in manufacturing headcount during the fleet enhancement, great as well as an increase in marketing expenses.
Regarding our guidance for the second quarter.
The forecast free cash flow to be in the range of negative $80 million to $90 million.
The projected growth in spending quarter over quarter would expect it to be driven by the ongoing work.
Yes, I'm period, combined with the ramp and design effort for our future fleet.
All his investments to increase the scale of our flight operations, leading up to commercial service.
Balance sheet remains strong with over $1.2 billion in cash cash equivalents marketable securities.
Forward.
Denise evaluate opportunities to raise capital grill and scale our business plan to use a combination of cash on hand revenue from commercial space flights those future inflows of capital to fund our strategic objectives.
I'd like to know and the call back over to Michael.
<unk>.
I'm pleased with our positive start to 2022 and the progress we've made so far.
Cause the global backdrop escalating supply chain labor constraints. Our teams are containing the majority of issues to minimize impact on professionals.
Forward to returning to space in queue form marching commercial service first quarter of next year.
So to recap.
We expect to begin baseline later this year with commercial launch in the first quarter of 2023.
Strong uptake across our product off including multi.
<unk>, that's what I was interested in research findings.
Our future astronauts community and approximately 800 reservations.
<unk> work for the next generation of our space by system is well underway and we are making progress in establishing the infrastructure scalar business.
Coming months will continue to be very busy for us as we complete our enhancements approached commercial service I'm looking forward to sharing updates on our progress.
That will turn the questions.
Operator, we're ready to begin Q&A portion of the call.
Thank you.
If you'd like to ask a question. Please press star followed by one or your telephone keypad.
Reason you'd like to read that question. Please press star followed by two again to ask a question press Star one and as a reminder, excusing a speaker phone. Please remember to pick up your handset before asking your question.
Pause here briefly as questions are registered.
Our first question comes from Robert Spingarn with <unk> Research police received.
Good afternoon.
Michael or dog.
With all the changes to the spaceship and the mother ship to use or see a scenario, where the FAA wants the updates to go through.
Different certification process and just a few tests by selecting changed there.
No we do not perceive that Rob we.
The ships are the same you're familiar with our licensing process I believe and then the updates that are going through here aren't changing the foundational structure. The ship radar systems, they're there and like I said strengthening various structures and getting things ready for a higher volume commercial use our service.
The license that we operate on will stay the same.
Okay and then just.
The process of developing these spaceships, you've talked about leveraging the aerospace supply chain to build the ultra shifts and the mother ships with the struggles that a lot of suppliers are having now with raw materials and labor just general supply chain issues.
And the work they have with others.
[noise], how are you getting them to agree to work with Virgin Galactic.
Under these conditions or the volume so low at this point, they really don't have to make these decisions.
So I think I've got a couple of things going on.
One thing that we've been purposeful about doing is as we talk about evolving right cause it's an evolution of of our current ship that 17 years behind it to this delta class.
The main work is it.
Is allowing us to take what used to be many many kind of subsystems are sub assemblies and consolidated that down to just a few such that when we take those few major subassemblies out into the market. There. There is substantial dollars right. There is substantial contracts that are meaningful to people. So that's one thing that has allowed us to <unk>.
<unk> people to the table I think the essence of what we're doing is also.
Kind of exciting into the marketplace, there, but you know people need to make money and we're putting together contract or contracts and buys that will be material for folks.
The.
The availability.
Capacity within the market is still good and still solid for us and so we were really pleased to see the turnout and the responses are starting to come in on the horrify process I think the.
Supply chains are snarled around the world and and there's a lot going on with that the the timing.
I'm not going to try to predict two three years out, but what we're doing upfront uhm isn't dealing with major things and supply upfront is going to be working with each other on the engineering of this deciding how we're going to determine what part of the design, we will finish ourselves and what will ask these ads.
Buyers to do and so the main material wrap up is going to come later. So I think we're ahead of it and everyone will have time to manage that appropriately.
The Big thing, we're doing is making sure we have material contracts that are just good for People's business and I think we're seeing great response to that.
And Yeah, you mentioned these dollars uhm, maybe Doug can take this should we see any kind of movement capex here over the next several quarters as more and more people get involved or that's it.
Doesn't happen that soon.
That's the what you'll see is R&D expense uhm it doesn't actually become capex until we get to a later stage it'll it'll crossover perhaps like in 2020, <unk> 22, or three of 2024 <unk>.
Until you an accounting convention that everything is reflected as R&D until we reach that point.
Fair enough, but then how does that trend.
So the trend in the spending yeah, so what you'll see.
One quarter guidance of $80 million to $90 million, you'll see see a ramp happening through 2022 into 2023, we didn't quantify that but you can see the layers of spending coming in between the the design work and the <unk>.
Building out of the factory and other infrastructure, we're doing so you'll see a ramp into 2023, but we haven't quantified that publicly.
Okay. Okay. Thank you very much.
Thanks, Rob.
Thank you for your question.
Our next question comes from Oliver Chen Cohen. Please.
Please proceed.
Alright, alright. Thank you very much on the decision to delay to Q1 I've I've just curious about the rationale there and wouldn't have made more sense to give yourself more Christian to cue to just given a lot of the uncertainty that we're seeing out in the market also with regards to the ticket sales and the man.
That you're seeing.
Your thoughts on if it's been volatile than in any updated thoughts on the ticket window that'd be helpful. Thank you.
Hi, all of our Michael here the on the first one we tried to.
Provide as accurate.
Point of view on schedule system can and we've been I think improving our ability to forecast out. So yeah. We're still several several months away right. We're here in in early May now, but the the.
The teams had been doing incredible effort to basically contain.
All these little issues that pop up that have potential to push schedules back and they they really don't excellent job on that but accumulatively. We are seen both of <unk> things that have taken.
Taken a week here two weeks there uhm that is kind of extended on our critical path. So we think it's appropriate to add further contingency in so you ask have we given ourselves enough as we we do expect to have.
Ah slight back to space with unity in the fourth quarter and so that gives you a kind of a little bit of sense of containment on schedule and so moving from Q4 to a projected Q1 of 23 for commercial service. We think is appropriate we built in his assessment of our own schedules and we've added <unk>.
Engine C against this new schedule as well we want to be accurate again, we don't want to be at a spot where we're not me to the date, but we also don't want to be so padded that we're also not not be an accurate in that sense. So we think we've given the right <unk>.
Direction on where these are going that's that's how we came up with these states.
Oh, sorry to all of our you ask about.
Alright could you ask the ticketing part of that again was it just a receipt I.
I heard you guys were the violence volatility in what way.
Curious about the demand profile and also uhm the duration of the sales window in terms of any updated thoughts on on what you're saying.
For ticket sales.
No no of course ticket sales are going really well and what we generally have right now has a backlog of people that have.
Gone through our CRM processes and said, yes, I'm ready to go now can you please call in and we have.
What's effectively a two way interview with people just understanding what they're looking for people understand how <unk>, how the service to the experience for work and timetables in there it's going really well we are.
And she said we have about 800 people right now that's that's quite a bit of a backlog relative to starting to commercial service in Q1 of the upcoming year. So we're not.
I'd say it an internal race with ourselves to complete out we only have 200 left to go so it's a.
Very small team that is taking these calls one by one as they come through our conversion rates are are excellent.
And at this stage, where we only have 200 level, we don't need to add more people to that so we feel we're kind of right on track to get ourselves. The thousand people. We wanted to put that's kind of our first balance of this commercial service launches.
Really good there and then I said, we're doing this with.
Effectively one one very small thing I'll, just put it that way and what we're learning from that is as we then get further down and we started to get closer to where the delta and seems to replace your going to ramp. We know we can basically replicate the process, we've been doing and that's how we will scale and stuff that's been going on so it's been it's been really good and.
The people who are coming in have been mostly I'm still going for a single seat, but we're also starting to see purchases across our spectrum multiple seats as well as a full plate buyouts AD and that's been really excited to see people have understanding they want to do this not just an individual pioneer but also.
You know groups of families that are encouraged to make this a part of a meaningful part of their lives. So I like to have that complaint out.
Okay and that's very helpful. Last question on the membership community comments do you have any updated our further thoughts on what kinds of partnerships and or experiential focuses your house.
And then on the digital twin that was interesting what's the implication for that kind of technology, I assume speed agility and quality and it enables you to really collaborate and more real time across suppliers. Thank you.
Sure. So I don't say something not necessarily new in what we're trying to do in our.
Community peace, but the importance of it we just continue to emphasize on each of these calls it's a meaningful part of the dialogue, we have with customers as they come in I think they very much recognize this is a journey to a critical moment in that journey matters. So some of these things are going to be a virtue.
For a moment that we can include the entire community. Some things are going to be very meaningful gatherings. Yeah. We've got one that will come up in the fall in Wyoming that will be a very purposeful that was stinker.
Speakers. So it will be very interesting. Some things are are more for social engagements along the way so.
I don't think we have anything new to share in that regard other than the importance and that and the appeal of of this as we discuss it with a customer says they're joined it on remains very strong. So are we liked that part of our strategy. We think that differentiates us a lot and then dug yeah, we've been talking to turn on the digital twin So I think.
You want to take that part sure yeah. So we have a summary of it in a page nine of our deck, but they kind of have.
To go into the details of it and you can think of it as a platform or a suite of tools, a digital tools that really enables higher quality and velocity to the design and production cycle. So this has been proven out by leading aerospace companies and allows us to integrate seamlessly with the supply chain that's weird.
Have a digital database that we're all using them together.
But to go a little deeper it gives you the ability to do model based systems engineering and design. So we get all of the the aircraft requirements into this database do our cat. We can do the simulation optimization of the design across all of the disciplines and then extends through the product by management. So we can collaborate and.
Gives the governance on the whole system for change control and such they put all this together allows us to work by seamlessly are much much faster than we did before so it's it's gonna be very helpful to our Ah rapid aircraft development program going into.
Thank you best regards.
Thanks.
Thank you for your question.
Our next question comes from Greg Conrad from Jeffries. Please proceed.
Good evening.
Just maybe to to start <unk> and imagine you mentioned three flights per month once those get ramped I mean is there any learning curve or wants those enter commercial service should we think about that three flights a month when they're both in services kind of happening right away.
I think I'll unity, we understand that ship well, we've been working with it for several years, we understand uhm, what we've put into this enhancement program. Our teams to new Mexico are getting ready to do that so we expect to see that come together well, we will have if you call. It right. We will have a test.
Flight coming out of it.
The enhancement created otherwise should be two one will do what we call it the Wifi where we.
Take unity out that releasing come down and an unempowered fashion and.
And that just kind of confirms all that you're handling surfaces flight dynamics and then we'll do a power trip to space as well. So those two things also allow us to.
Cut our teeth on how we're going to turn the ship. So by the time, we started commercial service, we feel good and confident we'll be able to do that I'll not answerable.
I imagine we'll be doing the same thing while it will be starting.
Commercial service, we expect midway through twenty-three it will itself be going through a series of flight test program.
And those are the ones well also do a little bit more analysis, because there'll be your first time out of the barn so to speak.
It will give our maintenance teams time.
They say practice that cut our teeth on that so by the time, we get to commercial service I think we will be pretty close to where we're expecting an attorney there may be one or two flights in which we learn a little bit in between how 'bout on average I think we're we're targeting that every two weeks. So you know a little bit of time, maybe after the first two.
Commercial flights, but it's pretty close.
And then just kind of checking the math question I mean, when when you think about the 750 at 800 customer is it fair to assume they're offered a slot in the 2026 time frame or how do we think about you know the the current customers that are signing on you know when they're for.
<unk> our plan.
Yeah, I think that's that's a fair fair estimate as we have the same conversation with our customers as we do on these calls we talked about uhm are expected rates for unity and are expected rates per imagine we talk about the first of the planes coming out on Delta in 2000.
Five with commercials service really started 26 for the Delta. So everybody does does say math and says okay by the time I'm on the tail end of this first thousand that's likely kind of 26 area. There so people recognize that.
That's again very related to why this community not only is is an important on the journey. It's helpful to understand this is what I'm going to be engaged with how I'm going to get value by signing up now here I would also gets people and there's.
There's only a thousand at first but right now there's only 200 left and I think people are our understanding of the scarcity of this particular group and that's helped me as well.
Thank you.
Thank you for your question.
Our next question comes from teeth Osterlund with Truest. Please proceed.
Alright. Good evening. This is cheat on for my <unk>, Thanks for taking our questions.
First just regarding the labor constraints, you called out for what kind of roles within the company or are you mainly speaking to expand your hiring for right now and would have been the biggest challenges that you've encountered on the labor front do you see this dynamic improving over the next quarter or two or does it seem like a physician could be becoming more challenging.
I merely the place where we have labor I'd take constraints within the engineering room, So manufacturing, we've actually been able to.
Kind of staff, our team well, they're both with her own team and and supplemented by contracted forces as we go the engineering piece is where we are amazing people I'll put it in two ways on one hand, we're ramping up engineering for the future fleet and we're having great success there.
I think I spoke with our head of the people organization, We got 40 engineers showing up this month.
So we're doing a great job on hiring but the the enhancement program, we're really using our engineering force that knows our ships.
Because the new people are hiring they're going to be on the future fleet and where are we have been we had an engineering team that mostly had been building one ship imagine because unity and eve were more M flight testing or have an operational Buddy. We now have that same engineering teams. It has experienced spread over all three shifts and they're doing incredible work.
But there is obviously much more scope. So we've been supplementing them as they go uhm, but that's supplementing has come at a somewhat slower rate than we've been able to keep.
Keep our schedule against and that's why you see is talking about labor constraints, just within the experienced engineering group as we split our existing team from our main focus on one ship to working on three all at once so that has a contained box to it right as we finish up the enhancement programs will be rolling.
Many will continue with existing ships sit there and service. The many of those experienced engineers will also transition uhm as planned into our Delta classic New mothership designs. So that that's the case you may be some parameters around it.
Okay, Yeah that makes sense I've been just a question on pricing just you know with broad based information I wouldn't mind right now has there been any indication at all in your conversation theater with customers. I currently have reservations prospective customers that would suggest that you know demand or interest cause you know might be slowed down at all.
Is this what you were expecting at the beginning of the year.
Potential that you know you would need that modify your pricing strategy at all.
No we're not seeing that two things I think the the customers that had been with us for early on aren't really good value position.
Came in and 200 $250000 I think they're they're in a great value point of view, so that's kind.
Look at inflation rates.
They invested early and I think that's a good thing.
And we will be taking up to the rest of this first thousand at $450000 Uhm, We don't plan to all caught in place that price for the remaining 200 tickets.
You know, but once those those kind of full those last 200 are gone well, we'll assess pricey and appropriately against market there, but I think.
And the world inflation is hitting the cost of other things we're not taking the cost of these remaining 200 seats. We don't plan to take those about the $450 that we've announced.
Alright, Thanks for taking my question.
Of course thanks.
Thank you for your question.
Our next question comes from Christine Miwok with.
Morgan Stanley . Please proceed.
Hey, Christina.
Hey.
Okay.
I was wondering if you could provide more details on exactly what you're facing I would've thought that with parts for inspire you would have some stairs.
Sure. So let me I'll give you one <unk> to just cut for everybody listed inspire was or is ship that was going to be following imagine and we haven't been in <unk> for that.
So.
Because I know you're aware the majority of our ships are carbon alright, and we joined carbon carbon with the boxes and things, but there are places throughout all of our ships motherships of spaceships, where we use high performance metallics, sometimes to be in between joining carpet department pieces sometimes.
Joining carpet into the metallics, it's metallics, we're we're really see did.
Delivery times that are quite extended so we we've been handling these as they come up and.
Give you an example, we had.
<unk> that is built out of an aluminum alloy and.
That particular part as part of this process came into a redesign area.
Through the redesign the kind of block of raw materials ability of aluminum grew in size from what's generally is standard aluminum millet to something that's often a bit more custom those particular.
You know getting a block.
Block of material that we would need might've been a very short couple three weeks. The time, we see those really extending out and the supply chain has done a great job, beating those back for what could have been materials schedule impacts too finding alternative sources of supply and being very creative in that so we've been able to pull back from what could.
You know more complicated scheduled extension to things that are pretty manage.
Militantly these things start to add up and so that's where I think the supply is part of the topic as we talk to on an earlier question just the pace at which we're moving through the engineering drawing stick it to the work instructions to allow people get on the ship uhm as we spread kind of our experienced interior is over three ships versus one the combination of these things.
Added up where we thought it was appropriate to add more contingency into our schedule. It's it's it's not more than that but it's not lessened that these are the two things that were really seen together combine that's that's why we made a call early.
To share what we expect to see our scheduled shifting.
Oh, that's really helpful and thank you for the additional details and then it also when do we think about the enhancement actions on on unity and <unk> can you describe the milestones you've already achieved you've been going through the process for eight months now so I'd imagine you guys have accomplished quite a lot. So can you.
Share with us what what some of those milestones have been.
Sure and the teams I've just been amazing to watch them go on this because you again our existing team.
Got it two to three X ramp up and work and obviously, we're growing again and for the future. So people are really stuffed up unity and solid shape it will be <unk>.
<unk> that we gave unity it will complete.
Caught on our original schedule. So the unity team will probably have some time just to do a few extra bonus items on there. He was really the the ship it's got the longer longer piece of time in there, but the milestone that we put in the presentation today was talking about the <unk>.
Launch pylon.
Yeah for those who aren't familiar with what's going on on our ship.
It's probably hard picture to understand but this is the piece that attaches the spaceship to the center of the wing of the mothership not only on a structural level, but also this is where all the.
Electron the electricity moves through there the air moves through there, it's a very important part and the original designer that had three point. So that was fine for the work and the efforts we were doing with the implied test.
We move into commercial service, we just wanted to open up the envelope of of conditions that we would fly within and we wanted something structurally.
Much much more robust.
It's going in and doing some reasonable amount of surgery onto the wing and opening that up and so you saw that picture coming in back in April . We're we're actually able to set a new part into an existing effort in the wing with all the structural efforts kind of done and ready to go that was a big milestone we actually brought.
Everybody together got a big picture around that so I think that was the biggest one we've seen and that was also kind of just a good one to be have behind us alright. So now we have more things to fit and finish up but as far as big Big milestones that was the one that we went through in April and we were pleased to see it.
Oh, great well. Thank you very much for all that color I really helpful.
Thanks Christine.
Thank you for your question.
Our last question comes from miles Walton from UBS. Please proceed.
No I also good evening.
Hey, Hey, so maybe could you go into the the Delta a little bit I think Michael you'd said reiterated done the call May 25 is still be returned it for that.
<unk> with current slipped on the reentering.
So with Redfin commercial service.
It's not in any way, having a ripple effect.
Constraints or anything like that so the 2025.
Yes, the timing table, we've got out on Delta, we believe it's not impacted by this.
Practical level of some of those I'll call an experienced engineers will be a little later over to the party, but in the schedule. We've laid out for ourselves. There. We don't think that's that has a material impact.
And then on the RFID is that you are in the process of.
Issuing or have issued I guess.
So does this mean that you are in a firm design at this point.
Or are you still in you know collaborative design with what their capabilities are in deciding what you're gonna have <unk> <unk> <unk> <unk>.
<unk> you know telling that you've you frozen in mind, you know, what you're going to <unk> and now it's just a question of a price.
Well, let's see I think just again speaking cause a lot of a lot of folks are probably listening.
It's important for the grounding this isn't a brand new shift going forward right. This is an evolution off of our current shifts and and that matters right because the the vast majority of that design. His dad is an intact and and what we're doing heavily is now reworking.
That design when we use these words designed for manufacturability, allowing them to come together in fewer larger sub assemblies other can be sent out so that's.
There's much of that design work that is done so I'll call you in place from that standpoint, what.
What we are finding out through the <unk> process.
As we mentioned wanting one example around.
Composites submit.
[noise] discussion earlier, but we're finding where people have <unk>.
Either.
Some new capabilities that we didn't fully.
Fully recognize or maybe a supplier might have multiple capabilities that we thought might be in two different suppliers things like that so that's causing us to continue to make some trace on.
What do we want to do what we could get more out to this group does that a more efficient process along the way.
So there's still trained to be made in that category those types of categories. So I'd say.
And the detail, it's not locked from design, because we're making trades with the slot players we've talked to down select them, but again.
Evolution of the current designs relative to a new airframe a ton of our design spot.
[laughter], sorry, and the first point, which must be the last one for you.
Issue, those acceptance, where you'll get them back in your issue the contracts for supply do you think that is true and of ear type of <unk>.
For the major assemblies.
I think sooner for it then the end of the year for sure.
Okay great.
Great. Thanks, so much.
Thank you.
Thank you for your question.
There are no further questions waiting at this time, so I'll pass the conference back over to the management team for any closing remarks.
No I I think as we always appreciate everybody.
<unk> on the call with questions and all of those who are listed in we're excited for what's still to come and thank you for your time today.
That concludes the Virgin Galactic first quarter of 2022 earnings Conference call. Thank you for your participation you may now disconnect your lines.