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Virgin Galactic to cut workforce by 18%

Virgin Galactic launches its first commercial spaceflight

(Reuters) -Virgin Galactic Holdings announced on Wednesday it will be laying off approximately 185 employees, constituting about 18% of its workforce, in a bid to cut costs.

Shares of the company were up 14.1% after the bell.

The space company expects to save $25 million annually following the reduction.

"Cutting costs is the only way for struggling companies like Virgin Galactic to get through this economic cycle — a wave of bankruptcies is coming for those who don't take such measures," said Justus Parmar, Founder and CEO at venture capital firm Fortuna Investments.

The California-based company estimates charges of about $5 million related to employee severance payments, benefits and related termination costs to be recognized in the fourth quarter of 2023.

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Parmar added the company will likely have to initiate more cost cuts to turn in a profit.

Virgin Galactic forecast a fourth-quarter revenue of about $3 million.

It reported a third-quarter loss of 28 cents per share, compared with analysts' expectation of 43 cents, according to LSEG data.

(Reporting by Aishwarya Jain; Editing by Krishna Chandra Eluri)