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Boeing, Virgin Galactic in court battle

April 8, 2024

On March 21st aerospace giant Boeing entered a writ against Virgin Galactic in the US District Court of Virginia. The action alleged that Virgin owed Boeing $26 million (€24m) and that it had misappropriated certain IP and trade secrets associated with the development for a new space tourism aircraft for Virgin.

Boeing, and an associated business, Aurora Flight Sciences, alleged that a design contract agreed in 2022 with Aurora for work on Virgin’s new ‘mothership’ that would replace the existing space tourism aircraft (‘Eve’, named after Sir Richard Branson’s mother) saw an “inadvertent” transfer of proprietary information that has not been returned to Boeing/Aurora.

The contract covered two aircraft for delivery in 2025. However, according to the lawsuit: “Aurora concluded that it would not be possible for Virgin Galactic to produce the new Mothership Virgin Galactic wanted, on the budget available to it, on the timeline Virgin Galactic hoped to meet.”

Virgin had “refused” to destroy the preparatory technology which Boeing and Aurora claim are trade secrets.

Virgin responded by saying: “We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend ourselves in the appropriate forum.”

Virgin has now counter-sued and its statement to the Court on April 4th claimed that Boeing’s work was “shoddy and incomplete”. Virgin says that the Integrated Baseline Review (IBR) and Preliminary Design Review (PDR), both supplied by Boeing/Aurora were poor.

“The quality of the IBR Boeing conducted was so poor that Virgin Galactic and Boeing agreed that Boeing was required to redo the review,” read Virgin’s counter claim, adding that less than half the agreed deliverables were supplied. In the PDR element only 346 elements of the required 580 were delivered and that they were of such poor quality that only 60 percent were of any value.

“These missing artifacts related to critical aspects of the Mothership program, including avionics, design, flight physics, propulsion, stress engineering, vehicle sub-systems, and material and process. Boeing’s failures with respect to its agreement with Virgin Galactic are consistent with Boeing’s record of poor quality control and mismanagement,” the complaint added.

In its suit, Virgin Galactic argues that the disputed trade secrets were “rightfully transferred” to its control under the terms of its contract. Sir Richard Branson’s company also alleges that Boeing failed repeatedly to live up to its end of the agreement despite being paid more than $45 million for its services.

Virgin added that Boeing repeatedly failed and those failures ultimately led to the termination of their commercial partnership and is claiming damages derived from the $45 million that it had already paid to Boeing to develop the next-generation mothership.

Virgin Galactic’s suit adds to the mounting allegations of mismanagement and shoddy work at Boeing, which recently announced CEO Dave Calhoun would be stepping down at the end of the year.

The bad news has done little to help confidence in Branson’s space tourism business. Last week its already depressed share price on the New York Stock Exchange crashed 17 per cent to close on April 5th at $1.24. Since January 1st this year its Virgin Galactic Holdings share price has fallen 47 per cent in value.

Virgin’s last tourism Flight 06 happened on January 26th and its ‘next generation’ Delta Class test flight will not happen before 2025. The plan then is to fly the new Delta Class vehicle once or twice a week once testing is over.

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