Virgin Galactic takes Abu Dhabi oil money and flies

Space tourism gets a shot in the arm as billionaires trade cash.

WhiteKnightTwo
It may be a case of the rich getting richer or more likely it might be a sign of the only way these space tourism companies ever get off the ground. Today Virgin Galactic today sold a 32% stake of the company, which is valued at about $900 million, to an Abu Dhabi-based investor raising $280 million to help fund future test-flight program.

Virgin Galactic stated that it expects the capital infusion to fully fund the company to its commencement of commercial operations. The Virgin Group has spent over $100 million on its space flight venture since forming it in 2004.

With the investment Abu Dhabi's Aabar Group gets exclusive rights to host Virgin space tourist and scientific flights. The group also said it wants to pay an extra $100 million to fund a program to launch small satellites of its own into orbit, and will build spaceport facilities in Abu Dhabi. US regulators and others must approve the deal.

Virgin Galactic is in the final stages of developing and testing commercial sub-orbital space vehicles based on the prototype SpaceShipOne. The current launch aircraft, WhiteKnightTwo, made a splash this week by flying at the Experimental Aircraft Association's annual AirVenture air show in Oshkosh, Wisconsin.  

WhiteKnightTwo will carry the pressurized spacecraft SpaceShipTwo to about 50,000ft, where SpaceShipTwo will release and fire a rocket taking it to about 360,000ft at speeds over Mach 3, Virgin says. SpaceShipTwo then glides back to a runway landing. More than 300 people have paid almost $40 million in ticket deposits to get on the flights, according to London-based Virgin.

SpaceShipTwo will begin test flights before the end of 2009. Both vehicles offer a unique environment for space tourism and a wide range of science research applications as well as a platform for small satellite launch, Virgin stated.

"We are building a great partnership for the development of the world's first private sector integrated human and payload space launch system," said Patrick McCall, Virgin Group Commercial Director in a statement.

According to Forbes.com, this may not be the last big financial splash the space company makes: "The aim over a bit of time is to try to IPO the business," said a spokesman for Virgin Group. He said the procedure would follow a similar template seen at Virgin Blue, the Australian airline floated in 2003; Virgin Mobile UK, floated in 2004; and Virgin Mobile USA, floated in 2007. The entire Virgin Group even went public in 1986, but was bought back by Virgin's billionaire owner, Richard Branson.  Such a move by Virgin Galactic would be a couple years away at least, observers said.

Commercializing space is a hot topic in some circles.  This month the aerospace consultancy Futron said that as much as $1.5 billion may be up for grabs for commercial space operations in the next ten years.

Published reports note that Abu Dhabi is the richest of the seven sheikdoms that make up the United Arab Emirates and controls the vast majority of the region's oil reserves - meaning it has more cash than it knows what to do with. The Aabar groups has taken full advantage of its cash position recently investing millions in car companies Mercedes-Benz andTesla Motors.

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