Virgin Galactic to cut workforce by 18%

(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.

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)