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Boeing bets US$20m on Virgin Galactic as space trips beckon
[DALLAS] Boeing Co agreed to invest US$20 million for a minority stake in Virgin Galactic, a startup that is preparing to fly its customers into space next year.
The relationship is designed as a collaboration aimed at shaping the future of human space travel, the companies said in a statement Tuesday. Virgin Galactic also is setting longer-term sights on shuttling airline travellers around the world at high speeds - a mode of transport that will take years to achieve.
The deal positions the companies to explore the marketplace for airline travel at hypersonic speeds above the Earth's atmosphere, trimming trips across the globe to two hours or less. Elon Musk's Space Exploration Technologies Corp also has announced plans for such flights in the future.
Boeing's investment is "a catalyst for broader collaboration and deeper collaboration," said Virgin Galactic Chief Executive Officer George Whitesides.
The future of high-speed airline travel is "a big chess board" with numerous engineering, technological and financial issues to resolve, he said in an interview. "We can really start to dig into some of these questions that need to be put in place."
Boeing will make the investment through its HorizonX Ventures arm to join the space startup founded by UK billionaire Richard Branson. Boeing next year is set to fly its first commercial space customers - astronauts - to the International Space Station as part of the National Aeronautics and Space Administration's commercial crew program.
"We've gotten the question, ‘Why now, why this timing?'" said Brian Schettler, senior managing director at HorizonX Ventures. "Really, we see this great, momentous occasion on both sides" with the companies' first customer flights to space approaching.
Boeing's investment is contingent on Virgin Galactic going public by year-end as part of a merger with Social Capital Hedosophia Holdings Corp., which will hold a 49 per cent stake in the merged company. The arrangement to take Virgin Galactic public, announced in July, is designed to raise about US$800 million for Mr Branson's firm.
Mr Branson halted talks about a US$1 billion investment in Virgin from Saudi Arabia last year after the murder of journalist Jamal Kashoggi, a columnist for the Washington Post.
Social Capital, based in Palo Alto, California, is a special-purpose company that raised US$600 million in September 2017 with a "blank check" initial public offering.
"This is the beginning of an important collaboration for the future of air and space travel, which are the natural next steps for our human spaceflight program," Mr Branson said in the statement.