Virgin Galactic announced 18% layoffs and will suspend commercial space flights in the middle of next year.

On Wednesday, local time, space tourism company Virgin Galactic announced plans to suspend space flight operations next year and focus resources on the development of the next generation of Delta-class suborbital spacecraft.

Virgin Galaxy said in its third-quarter results that although it had been conducting monthly commercial launches since June, it would reduce the frequency of its VSS Unity space aircraft to 1/4 and then suspend flights "in mid-2024" to focus resources on the final assembly of the new Delta-class suborbital spacecraft.

On Tuesday, Virgin Galactic laid off 185 employees, or about 18 per cent of its workforce, with the aim of "reducing costs and strategically realigning resources". The job cuts reduce Virgin Galactic's workforce to 840 and are expected to save about $25 million a year.

Virgin Galactic posted a third-quarter net loss of $104.6 million, or 28 cents a share, compared with a previous forecast of 43 cents a share, according to analysts surveyed by LSEG.

Virgin Galactic had revenue of $1.7 million in the third quarter, up from $767000 in the same period last year. Virgin Galactic completed its fifth commercial space flight earlier this month.

Virgin Galactic shares rose 8 per cent in after-hours trading. The stock is down 55 per cent so far this year. At the end of the third quarter, Virgin Galactic had a total of $1.1 billion in cash and securities.

Virgin Galaxy has been spending heavily to expand its spacecraft, and currently operates only one VSS Unity spacecraft. Virgin Galactic is developing its Delta-class spacecraft to increase the frequency of its weekly flights. The company plans to open a new plant in Phoenix by mid-2024 to produce Delta-class ships.

"We expect to have sufficient funds to put our first two Delta-class ships into service and achieve positive cash flow by 2026," Michael Colglazier, chief executive of Virgin Galactic, said in a statement.