Virgin Galactic Reports Delay in Unity 23 Test Flight, Shares Fall 3.8% in Pre-Market

On September 10, Virgin Galactic Holdings, Inc. (SPCE) reported a delay in its next test flight, “Unity 23”, with the Italian Air Force to mid-October due to a potential manufacturing defect.

As a result, shares of the space travel company founded by Richard Branson dropped 3.8% in Monday’s pre-market trading session.

At the start of this month, Virgin Galactic revealed its plans for the first commercial, human-tended research mission named “Unity 23”. As per the plans, the rocket-powered test flight of SpaceShipTwo Unity aimed to carry three crew members from the National Research Council and the Italian Air Force.

The flight, which was previously scheduled for late September or early October, was subject to technical checks and weather conditions. (See Virgin stock charts on TipRanks)

On Friday, however, the company said that a third-party supplier recently pointed out a potential manufacturing defect during preparation for the Unity 23 test flight. The defect was reported in a component of the flight control actuation system.

The company said that it has not ascertained yet whether the defect is present in the company’s vehicles and whether any repair work is required.

In accordance with the company’s safety procedures, Virgin Galactic plans to conduct inspections in collaboration with the Italian Air Force. Upon completion of the inspection process, the company will provide further updates on the matter.

The company also clarified that the current issue is not related to the ongoing probe by the U.S. Federal Aviation Administration (FAA) after the July mishap.

Based on the detected manufacturing defect and the current FAA matter, the company now expects to open its flight window for Unity 23 in mid-October.

Virgin Galactic CEO Michael Colglazier commented, “We have a robust pre-flight readiness approach that is rooted in our thorough, proactive and safety-first culture. There is nothing more important to us than the integrity of our vehicles.”

He further said, “Our test flight processes and procedures are rigorous and structured to identify and resolve these types of issues. We look forward to taking to the skies again soon.”

Susquehanna analyst Charles Minervino recently reiterated a Hold rating on the stock with the price target of $35 (39.1% upside potential).

Concerning the ongoing FAA matter, Minervino said that the test flight was successful despite it dropping below protected airspace due to high altitude winds.

Overall, the stock has a Hold consensus rating based on 4 Buys, 5 Holds, and 2 Sells. The average Virgin Galactic Holdings price target of $35.30 implies nearly 40.3% upside potential.