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Michael Colglazier

Thanks, Eric. 2024 marked an inflection point for Virgin Galactic. We opened the year with our prototype spaceship, demonstrating the amazing customer experience delivered by Virgin Galactic spaceflights, and we closed 2024 by wrapping up the multiyear design phase of our groundbreaking new spaceships. 2025 will be a year of momentum as we are now building the spaceships that will dramatically expand human spaceflight with unprecedented levels of safety, rapid reusability and cost efficiency.
Fabrication of tools and parts for these ships is well underway, as you will see in a moment. And our teams are excited to kick off assembly of our first spaceship next month at our spaceship factory in Phoenix. The production and launch time line for the new ships remains on track with our first commercial research spaceflight expected in the summer of 2026 and the first private astronaut spaceflight in the fall of 2026. We are able to be more specific with projecting our time lines because we now have line of sight to the delivery dates of each and every tool and part that supports assembly.
With this work accelerating, we will spend time on today's call showcasing the advances already made as well as the milestones that will mark our progress going forward. One of the things that I am most excited about has been the transition of Virgin Galactic from an R&D-focused company to a company that builds real assets that drive real value.
I would like to highlight five of these key assets that differentiate our company. Turning to slide 4.
First is our new spaceship. These ships will have longer life, faster turnaround times and lower cost per flight than any human-rated spaceship in the world. They are designed to fly twice a week with a lifespan of over 500 spaceflights. This is a breakthrough design and a huge step forward in commercial space.
Second is our spaceship factory. We've made the needed nonrecurring infrastructure investments, and we are now able to add ships to our fleet quickly and cost effectively with a start to finish cycle time of new spaceships measured in months versus years.
Third, our rocket system. We've created the world's most powerful hybrid rocket system, which is proudly on display in the Smithsonian.
Our rocket system has outstanding safety features that are part of its elegant and reliable design and the quick change capability of our rocket motor supports the fastest refueling and turnaround time of any single space vehicle that is capable of human spaceflight.
Fourth, our customer and client experience, which is beyond compare. We have curated, honed and demonstrated our industry-leading customer experience, delivering human-first spaceflight for private astronauts and unparalleled microgravity environments for space research and space scientists. Our fifth and enormously valuable asset is our carrier ship platform, internally known as our mothership, which rarely gets the attention it deserves.
So let's give our carrier ship some airtime as we turn to slide 5. The first of our carrier ships named Eve has supported every test flight and commercial spaceflight for Virgin Galactic to date. This aircraft has several incredible capabilities. Its unique design allows it to reach altitudes of over 50,000 feet, and it can carry payloads weighing up to 35,000 pounds. Many aircraft can carry heavy weight to mid-level altitudes and some aircraft can carry modest payloads above 50,000 feet. But this combination of high altitude heavy lift capability is very rare.
We believe this is an opportunity. Turning to slide 6. As we've worked with industry experts to advance the design and planning of our next carrier ship, we believe the same high altitude heavy lift capability that supports Virgin Galactic's suborbital spaceflight business can also be of value to government and research customers, especially when a derivative model adds extended flight duration.
HALE aircraft, HALE being an acronym for high altitude, long endurance air vehicles are needed for several types of government and research missions, and we plan to explore the opportunity for a unique HALE-heavy derivative of our carrier platform in the future. But first things first and the absolute first thing is to bring Virgin Galactic to EBITDA positive operations by putting two of our new spaceships into service.
So let's turn to slide 7 and talk about how we are unlocking the growth and profitability of Virgin Galactic. 2024 was the year we designed our new spaceships. 2026 will be the year we fly our new spaceships. But 2025 is the year we actually build the first of these amazing new vehicles. With safety above all as the bedrock value of Virgin Galactic, we are working diligently to bring these ships to life with exceptional quality embedded at every stage.
One of the places we have invested heavily in quality is the long-lasting aerospace tools that are used to build the parts of our spaceship. These tools are key to creating the best possible parts and the most efficient assembly for each and every spaceship. These tools are also key to creating long-term value as they will be used again and again to expand our fleet.
Slides 8 through 13 of the presentation have been included to provide a glimpse into the incredible progress that's been made by our Virgin Galactic teammates as well as by the hugely dedicated teams at Qarbon Aerospace and Bell Textron. And while I can't name them all on this call, we are extremely appreciative of the outstanding work that is happening across the many companies who make up our extended supply chain.
All these groups are excited to be part of commercial spaceship development, and they are building momentum as our collective efforts become very visible and tangible. This is an unusual topic for an earnings call, but I think it's important to share this level of detail, as it underpins our progress and our forecasted delivery dates. There are three structural elements that come together to build our spaceships, the fuselage, the feather and the wing.
If you're following along with the presentation, there will be a graphic of the spaceship in the upper right corner of these upcoming slides, and the images on the slide refer to the sections highlighted in green. In slide 8, you can see the primary fuselage subassembly tools that are located in Qarbon's fabrication facility. These tools are used to fabricate the upper and lower skins of the cabin shell.
Moving to slide 9, you can see the feather subassembly tooling. These tools have highly complex geometries, and they are used to make the largest part in our spaceship.
Slide 10 shows the bulkhead, which is the major structural element that separates the cabin from the rocket system. The image shows the sheets of carbon fiber being laid up within the bulkhead tool before the entire assembly is sent to the autoclave to cure the part.
On slide 11, we are using an example with the wing to give you a sense of how the entire part fabrication process works. Starting at the left, the first image shows technicians placing layers of carbon fiber and precise patterns with varying thicknesses on the tool. Once this lay up process is complete, the tool and the carbon fiber are moved into an autoclave, which is a huge pressurized oven that cures the part in a way that gives our composite structures their strength. On the right, you can see the finished wing part ready for inspection and shipping to the spaceship factory in Phoenix.
On slide 12, you can see the process steps used to create our oxidizer tank. This tank is a critical component of the spaceship that holds our liquid oxidizer for the rocket motor, which powers the spaceship to space. The oxidizer tank in our prototype ship, Unity, only supported 40 to 50 flights before needing replacement, which would have required extensive maintenance downtime.
The first of our new tanks is complete and is shown here in the test stand about to enter cycle testing. Cycle testing will establish the expected lifespan of the tank, which we project to be many times higher than Unity's. This is one example of the many places we have redesigned our spaceship to minimize maintenance downtimes and enable multiple spaceflights per week on a sustained basis. Our next tank will be entering the autoclave this coming week. This tank is designated for our first spaceship, and it is on schedule to arrive in Phoenix in time for installation into the fuselage.
Slide 13 shows a still frame from a video our Spaceline President, Mike Moses, released this morning, highlighting the top 10 things he was excited to see happen over the last month. If you haven't seen it, it's a quick and fun way to showcase our progress, and I encourage you to watch it on our website or social channels. This will be an ongoing feature for Mike every month or two, and we will make it available to our customers, our investor base and our fans so they can track along with our progress.
Slide 14 previews several key milestones that will be taking place in 2025 and 2026. In March, we will start assembly of our first spaceship in our new spaceship factory. This moment has been years in the making, and our manufacturing team in Phoenix is chomping at the bit.
Building and testing of the first ship continues throughout the year, and we will be highlighting the many tangible milestones along the way to mark our progress. Our first test flight, a glide flight, is expected in spring 2026, which will lead to our first research spaceflight in summer 2026 and our first private astronaut flight, which is expected in the fall of 2026.
It's exciting to see the momentum and visible progress ramping up. As the ship comes together, we will be inviting our customers into our spaceship factory to meet the team and see how the ships that will bring them to space are being built. Speaking of our customers, I was recently talking with one of our future astronauts about how different our approach to building these new spaceships is relative to how our prototype spaceship was built. She was very curious to understand how we are building and flight testing new spaceships so much faster than we had done in the past. I imagine that if a long-term customer is curious, is likely some of you are as well.
So I've invited Mike Moses, our Spaceline President, to share his perspective on the changes that drive confidence in our current schedule. Over to you, Mike.

Michael Moses

Thanks, Michael. I've been part of Virgin Galactic as we built and did the flight testing for Spaceship Unity. Building and flight testing are two important phases. I want to talk about how we are approaching both of them in a different way with our Delta class program. Let me start by talking about the build phase, where we have high confidence in the schedule based on three factors: design software, high-quality suppliers and an experienced team.
First, before we even started making tools and parts, we built the spaceship digitally using advanced model-based software. This digital twin of our spaceship allows for precision in the design, especially as it relates to how various parts will fit together and interact in the real world. Each part is referenced to a fixed plane exactly where it will be placed in the spaceship. And this lets us determine everything from where to place the bolts on one part to the bolt holes on the adjacent part to where the brackets need to be placed to hold the wiring and the plumbing.
Despite best efforts, sometimes parts don't perfectly line up. So our design allows for certain parts to have tolerance to float and absorb any small deviations that may occur during manufacturing. This allows for a speedy assembly as the parts arrive into Phoenix.
Second, our parts are being made by suppliers who are industry leaders, companies that are used to mass-producing parts. They have proven processes and controls in place to make and inspect all parts before shipping them to our spaceship factory in Phoenix. Coupled with the digital thread I just mentioned, we are making these Delta spaceships in the same manner and with the same suppliers as modern aircraft.
By comparison, our prototype Spaceship Unity was built and assembled in a very linear fashion, often requiring the assembly sequence to pause as we needed to rework parts to ensure the proper fit.
Lastly, our team has experience with assembling spaceships. The folks setting up and running our spaceship factory are our most experienced technicians and leaders. They built Unity and we'll be bringing all of these learnings to bear. Our factory itself is laid out based on our past experiences.
We have assembly work areas designed to provide an extremely efficient and effective build flow, and our engineering teams will be deployed directly to the shop floor, so they can enable rapid resolution of any issues that may arise. In summary, Delta was designed intentionally to allow for an efficient build using aerospace industry-proven methods. The model-based software, the precision of the tools, combined with our suppliers' process controls and our highly experienced assembly team enables a much shorter time line.
Now let me pivot to discuss what happens once the spaceship is built, which is flight testing. It's important to keep in mind that Delta is able to take advantage of the years of flight testing that went into Spaceship Unity. Unity required moving in small incremental steps to build up the knowledge about the spaceship's performance and limits. The test flights of Delta will be much more like regression testing, where we are incrementally expanding how Delta flies, but doing so by comparing it to how we know Unity flew.
We aren't forging ahead into unknown territory. Another key difference between Unity and Delta is the use of our Iron Bird, a full scale engineering test bed of the Delta spaceship systems and electronics. Gathering this test data prior to flight test helps shorten the timeline.
Finally, while Delta will fly a similar number of test points, its ability to fly more frequently means that we will complete flight testing in months instead of years. These specific differences in how our Delta ships are being built and tested underpin the confidence in our delivery, and we are incredibly excited to send our first Delta ship to space in the summer of next year.
With that, I'll hand the call over to our CFO, Doug Ahrens, to share a financial update and outlook.

Douglas Ahrens

Thanks, Mike. Good afternoon, everyone.
Turning to slide 15. In addition to presenting our recent financial results, I'll share my perspective on the tremendous strides we've made to build the assets that will create a powerful economic engine for Virgin Galactic. Starting with the fourth quarter of 2024, we generated revenue of $400,000 from future astronaut membership fees.
As our Delta spaceship program advances, it drives a favorable trend in operating expenses. Total operating expenses for the fourth quarter were $82 million compared to $117 million in the prior year period as our spending has shifted from R&D to capital investments in manufacturing assets that will be leveraged to build multiple spaceships. Adjusted EBITDA showed a favorable trend as well, being negative $63 million in the fourth quarter compared to negative $84 million in the prior year period. Free cash flow was negative $117 million in the fourth quarter at the low end of the range we guided in our last earnings call.
Turning to slide 16. For the full fiscal year 2024, we generated revenue of $7 million, driven by two commercial spaceflights as well as future astronaut membership fees. Notably, average ticket prices on the last spaceflight rose to $800,000 per seat compared to just over $300,000 per seat in the prior year, indicating the incredible value being delivered to our astronauts through our spaceflight experience. The favorable trends in our financials were even more visible for the full year.
As a result of cost reduction efforts and a shift toward investment in manufacturing assets for spaceship production, total operating expenses were $384 million in 2024, reflecting a 29% reduction from $538 million in the prior year. We reported a GAAP net loss of $347 million, representing a 31% improvement compared to $502 million in the prior year.
Adjusted EBITDA for the year was negative $289 million, an improvement of 32% (technical difficulty) in the prior year. Obviously, these improvements are a result of Virgin Galactic moving beyond the heavy R&D phase of spaceship design and now building manufacturing assets we will use to cost effectively build our fleet.
Michael showed pictures of the tooling that has been created to build spaceship components. These are high-quality value-creating assets that give us the capability to repeatedly build additional spaceships at a relatively low variable cost of $50 million to $60 million each, enabling a payback period of under 6 months for each new spaceship. Approximately half of our spending in 2025 is expected to be for one-time capital expenditures for tooling manufacturing capacity and the production of our first two new Delta class spaceships.
Our balance sheet reflects this growing capital investment, which appears as property, plant and equipment, or PP&E. With these investments, the book value of our PP&E currently exceeds $200 million, and the book value of PP&E is expected to continue to grow and to nearly double by the end of 2025.
Moving to slide 17. We ended the year with $657 million in cash, cash equivalents and marketable securities. In 2024, we generated $138 million in gross proceeds through an at-the-market or ATM equity offering program.
Moving to our projection. Revenue for the first quarter of 2025 is expected to be approximately $400,000 for astronaut membership fees. Forecasted free cash flow for the first quarter of 2025 is expected to be in the range of negative $115 million to $125 million. We expect cash spending to decelerate through 2025 as we complete the investments in tooling and manufacturing capacity to build spaceships. We are tightly managing our spending with fiscal discipline across the board.
Turning to slide 18. We are providing a recap of our economic model, which clearly shows the business opportunity in front of us. Right now, we are laser-focused on achieving the economics in the first column with the introduction of our initial fleet of two new Delta class spaceships.
With just two spaceships and current pricing of $600,000 per seat, we expect to achieve an annualized level of approximately $450 million of revenue. Because of the tremendous value being delivered to our astronauts at current pricing of $600,000 per seat, our contribution margins are forecasted to exceed 80%, resulting in adjusted EBITDA of about $100 million per year with just our first two spaceships in service.
Profits have the potential to grow exponentially as we add spaceships and another launch vehicle to our fleet at Spaceport America in New Mexico. Michael outlined the outstanding progress we are making with spaceship production and the key milestones ahead, leading up to commercial spaceflights next year. As we progress through these exciting milestones and march toward profitability with two new spaceships, we will continue to evaluate opportunities to optimize our balance sheet and also deliver a winning outcome for all our stakeholders.
With that, I'll turn the call back over to Michael.

Michael Colglazier

Thanks, Doug. As you can see, outstanding progress is underway across the company. As I mentioned at the opening, 2025 is a year of momentum, and that momentum has already begun. Our entire company is laser-focused on delivering these first two Delta spaceships in a timely fashion, consistent with the scheduled milestones discussed today. We are driving effective execution across all elements of the program, and we do so with the belief in our mission and excitement to see our first ship in space next summer.
Let's open the call for questions.

Question and Answer Session

Operator

(Operator Instructions) Before we take our first question, I'd like to turn the call over to Eric Cerny, Investor Relations. Please go ahead.

Eric Cerny

Thank you. For awareness, we filed a couple of post effective amendments to our Form S-3 registration statement and a prospectus supplement this afternoon. These filings relate to our existing ATM program and our filing status. There is no new ATM program. Thank you, operator.
We're ready for the first question.

Operator

Greg Konrad, Jefferies.

Greg Konrad

I appreciate all the detail with the time line of flights in 2026. But how quickly do you think you can kind of ramp up from there? And then if we think about your baseline initial fleet model, is that a good baseline for 2027 now that time line has been locked in, just thinking about the speed of flights in 2027?

Michael Colglazier

Greg, it's Michael. And I'll give a start to that, and Mike Moses is as a bonus with us today, and I'll let him add his two cents as well. So we will have done the ground testing and the flight testing to give us confidence in the vehicles, and we will have planned and have planned our maintenance strategies to enable these ships to turn on the pace that we've talked about twice a week pretty much from the time we're ready to put them into private astronaut service, so -- which we talked about in the fall.
And so to your second part of your question, 2027, we feel we should be pretty much on track for the pace we've been talking. I think it's prudent for us to give ourselves a little bit of pacing, help our teams get ready to what will be truly unprecedented volumes of not just commercial space, but any humans in space at that volume and make sure that we are delivering the best customer experience every time.
So we will prudently ramp ourselves up a little bit as we lean into that. But I believe 2027 if not right, January 1, right at the beginning of that year, we should be up at a pace that we've talked. Mike, anything you'd like to add on that?

Michael Moses

Yes. No, just in support of that, our test campaign, if you're familiar with flight testing, kind of can be made up of several parts, a thing called DT and OT, development test and operational test. And we're able to combine the two. So while we do our flight testing program, we'll be testing out the operational side of things, both in the air and on the ground.
And so you'll see some turnaround times during our flight test program that are fairly short, representative of the commercial service turn times, and you'll see some that are longer as we do more detailed data analysis. But the idea being we get our feet underneath us in the development program, the test program and then that last part of 2026. So Michael, as you said, we would hit the ground running at full rate in 2027.

Greg Konrad

I mean -- and I guess just as a follow-up to that, first research spaceflight in summer, first private astronaut flight in fall. Should we expect multiple research spaceflights in that window before you get to the first private astronaut? Or kind of what's in the manifest between those two events?

Michael Moses

Yes, Greg, exactly. I won't give specific guidance on the numbers of flights planned. But yes, on the order of 6 to 10 spaceflights to test out all the various aspects. We'll be flying a mix of research payloads, employees, test subjects, checking out the cabin. But really, the point is to test out the systems as they go to space. And again, in my remarks, you heard me say, just as a reminder, this isn't the first spaceship to go to space, right?
So we're building off the back of Unity. So we're really just testing the differences that we built into Delta. And so a similar number of test points, but yes, I think we'll be able to go rapidly through the test program.

Greg Konrad

And then maybe just one last one. As the schedule has firmed up and you kind of have dates, like what's your current thinking around reopening the order book and maybe any indications when we could see that happen?

Michael Colglazier

It's back to Michael, Greg. I still believe the right timing for people to come on in Virgin Galactic is around a two year window. And as you, I believe, know, we have a solid book of business that will consume up our first year.
So as we reach, I'd say, the end of this year, perhaps the opening of next, but probably the end of this year, I think that's the right time to begin open up -- opening up, say, reasonable sized tranches of sales. I don't think we'll just throw the gates open. I think we'll pull in a group at a time and continue to ensure we've got an order book in advance of the capacity of our vehicles going forward.

Operator

Michael Leshock, KeyBanc Capital Markets.

Michael Leshock

I wanted to ask first maybe on the rocket motor. I know you've been testing the propulsion system for the rocket motor. And have there been any changes in the propulsion system for Delta compared to Unity? Do you expect those to have similar thrust, efficiency and burn time?

Michael Moses

Mike, this is Mike Moses. So no changes to the motor itself from what we flew in Unity to what we'll be flying in Delta. As you saw in our presentation today, we did make a little bit of change to the tank, a propellant tank that holds our liquid oxidizer. So it's a slightly new design aimed at giving us lifetime. So basically more uses out of that tank on the order of hundreds of flights.
So that's a change, but we'll be able to check all that out on the ground before we get into flights. So as it relates to the motor itself, similar thrust, similar performance profiles as to what we were doing on Unity.

Michael Leshock

And then on the first Delta flight being for research payloads, as we think about maybe the first year or two of Delta shifts in commercial service, have you considered having a higher percentage of research flights at that higher margin, at least initially to kind of accelerate your path to positive free cash flow?

Michael Colglazier

I think we'll do a mix. There's balancing of all the constituencies here. Of course, we will prioritize ensuring the company is in good financial state and ensuring that as we fly our ships, those are driving EBITDA positive operations for us. We can do that and bring in a substantial percentage of those flights for customers that have been in the queue for a while, even though that they are -- they've been in earlier -- at earlier price points, which are much less. They've all been waiting super patiently, and it's time for us to fly them to space.
So we'll be doing both. What's really important to know, especially for our astronauts who've been waiting so long, but for everyone, the capacities that we have with these Delta ships enable -- we've put out -- we believe, with a conservative estimate, 125 flights a year at six people per ship on those flights, we'll be able to move through our existing backlog of people fairly quickly.
So we can bring in a high percentage of research flights, as you mentioned, probably higher rates than some of our early pieces and also bring in our existing astronaut base and fly them quite quickly. So I think the capacity will give us the chance to do both and then we scale from there.

Michael Leshock

Okay. And then lastly for me on the Redwire announcement, it was good to see that. How do you see the commercial research market evolving over the longer term? Maybe you could talk a bit about that agreement that you have. And just wondering if you see more opportunities for similar contracts going forward or if you've maybe thought about the size of what that addressable market might be?

Michael Colglazier

It's nice having Mike Moses on this call, you and I look at each other and like, hey, okay, you're from NASA in your past, why don't you take that one, and I'll pick up on it. So go ahead, Mike.

Michael Moses

Sure thing. Yes, the agreement with the Redwire is fantastic, and I think it highlights not only what we're doing here at Virgin Galactic, but what you see in the commercial spaceflight industry in general, which is a real surge in the commercialization opportunities that spaceflight offers.
Our platform, while maybe not unique in its capability, certainly offers a unique way to tackle what I would call a really fun and kind of game-changing thing where researchers can fly with their science, right? So in most other scientific fields, you design an experiment, you go into a lab, you do it yourself, you get your results. But in spaceflight, you hand that over to a professional astronaut who's up on the space station and they execute the science for you.
So the human-tended research opportunities, I think, are immense in spaceflight. The commercial suborbital market offers a chance to fly very frequently, rapid re-flight of your payload in your research, you can tune it. It doesn't have to be -- it can be less cost because it doesn't have to be highly automated and live on a space station for years at a time. So I think that's going to be groundbreaking in what we can do.
So I do think there's a big appeal to the research market. The Redwire contract specifically really kind of advances the technology application that we'll be applying. So the science, the meat of that agreement, right, is a smart locker that has power, has data, has communications with the payloads and the ship and allows the researcher to have access to much more capability in the back of our spaceship.

Michael Colglazier

And it's Michael. I believe I've shared this before, but as we watch the government, especially, really push both to the Moon and to Mars, those will have lots of science and research being able to be leveraged and take advantage of those flights. It's still going to be very expensive to get to the Moon. It's still very -- it's incredibly expensive to get to Mars. And so any research that's going to be on those ships for those longer duration missions wants to be really figured out.
And the best way to really figure out is to test and test and trial and trial. And that's where we believe we have an incredible platform to allow people to refine, maybe adapt, toughen or change their research that is planning to go further places. So we provide an excellent step stone into the longer duration missions that research is so important to.

Operator

Myles Walton, Wolfe Research.

Myles Walton

I was hoping you could touch on the potential augmentation of the mothership for other applications. And I know that your plan is, I think, for 2026 to start on the mothership two. Is there a way, or do you see a path where co-funding is possible to maybe take away some of that burden as you bring on additional mission profiles?

Michael Colglazier

Let me put the question to a bit of context, Myles, and then get to some of the specifics. So we've been consistent sharing our business model growth path. First things first, we need to get our first two ships into Spaceport America get to EBITDA positive operations.
Next thing we do, as Doug even alluded to in one of his pages today, add two more spaceships and another spaceship launch vehicle into New Mexico so that we fundamentally build out that first spaceport and we get all sorts of leverage on the fixed cost side to drive great exponential growth.
That's Phase 1, a fully functioning spaceport in New Mexico. Phase 2 is to take that operation and replicate it in other parts of the world. As we've shared, we've had great progress moving with the Italians and looking at a potential Air Force base in the Puglia region of Italy. That is one of several places we could go, but a very, very exciting one, and we're making good progress with them.
So to take the model that we've effectively built and as we're now talking all of these tools that we showed all the pictures of today, those are the same tools that will build spaceships for a spaceport in Italy, right? We've already built them. The design is already done. So it's quite effective for us to then add incremental shifts.
And so Phase 2 of our business plan is to go to second spaceports. And so then, there's like, okay, well, what's next? And there are many things that could be what's next. Obviously, we need -- we've been using the word mothership internally. A lot of people don't understand it.
So just to make it clear, we're calling it a spaceship launch vehicle. Eve is our first one. And as we've been working on the -- not just the beginning design phases, we're reasonably through our conceptual design, moving towards solid preliminary design doing the trade-offs we need to do there.
And we brought in outside experts to help us in that regard. We all pull back into what we've known for a decade, Eve and any derivative of Eve is hugely powerful in its ability to carry heavy weight to high altitude, and we talked about that on the call. So Myles, now specifically to your question, we put in an image there. Obviously, these carrier ships, these spaceship launch vehicles can carry spaceships, but if you can carry something that heavy to the height we do, you could also carry a pod that can do other things. And there are a lot of efforts there.
You're aware, Myles. There can be ISR, for those who don't know the acronym, intelligence surveillance reconnaissance missions. There's testing missions that go along with that. There's a lot going on in the U.S. right now, as I'm sure you're aware, that could use something that could carry heavy payloads to high altitudes.
Our derivative would need to have further range, getting to the long endurance part of HALE. And we understand how we would modify the existing Eve ship to enable that. So specifically to your question, is there opportunity for people to partner with us and will we look for people who might want to partner with us? I think that's a super smart opportunity for us and one that we are actively paying attention to because we think this is a real potential for the government. With that said, first things first.
We have to keep ourselves laser-focused on getting to the first of these two ships out and then the second one right behind it, so we get to EBITDA cash flow operations. So we are staying almost entirely on that. But the small group, the Tiger team we have against these carrier ship platforms as we grow absolutely is looking into how we could partner with other people largely in -- who do more military support for the government and seeing if there's an opportunity to partner for good for everyone.

Myles Walton

Okay. No, that's crystal clear, Michael. And then, Doug, I think I heard you right, just correct me if I'm wrong. Did you say that 2025 cash consumption would be below the $475 million in 2024? And then I think on the last call, you were looking for 2025 first quarter to potentially tick up in cash flow consumption, which doesn't look like it's happening.
Has there been sort of resequencing of cash profiles since the last call for the better?

Douglas Ahrens

No. There's been no real changes other than we talked about a peak in Q1. I think that peak is a little lower than we projected. So then the trend down for the year will continue and exiting, we had talked about exiting below $100 million spend by the fourth quarter. So yes, definitely lower spend in 2025 than 2024.

Operator

Oliver Chen. (Operator Instructions)

Thomas Nass

It's Tom Nass on for Oliver. I wanted to ask a follow-up on the previous free cash flow question. Between now and summer of 2026 or fall of 2026, how should we expect the trajectory of free cash flow to ramp to positivity over time?

Douglas Ahrens

Okay. This is Doug. Thanks for the question, Tom. So yes, to expand on this, I think it's important to get some perspective of where we're at. We're in a really good position right now with our balance sheet.
And we had been in the process earlier of building up cash that prepared us to convert that cash into assets now. That's in the form of manufacturing capacity, tooling, and now our first two spaceships. And I mentioned on the earlier remarks, you can see this in our book value, right? It's now over $200 million in the property, plant and equipment, and that will continue to grow substantially. So now you're going to see spending going down through 2024 and then in -- excuse me, 2025 and then going into 2026, because that investment in that capital will be behind us, and we're just moving towards commercial operations.
So the way to think about this is, we enter 2026, we've got some great assets available now. We'll have a couple of spaceships, and we're going to be going into commercial service. And what happens then is now we would start to see cash inflows ahead of the flights. So at this point, when we're entering commercial service and all of that, I mean, to use a football term, we're first in goal, right? We're in a really good position here.
And I think the value of the company becomes really obvious as we hit these milestones and move towards commercial service. So to put it in perspective, we would be trending down through 2025, as I said. And then 2026 is an inflection year because commercial service is in the summer of 2026, and that's when we start to see cash inflows coming in and we become positive around the time of beginning spaceflights.

Thomas Nass

Great. And then as a follow-up, I wanted to ask about any potential updates you might have on the customer experience side of the business, especially given the potential progress on the second spaceport in Italy? And then, overall, given the potential for a second spaceport, is there any updates to your existing private astronaut TAM estimate?

Michael Colglazier

I'll take that one, Tom. It's Michael here. One thing, if you watch the top 10 video that Mike Moses put out this morning, it's great. It's quick. It's fun.
One of the things you'll see in there is where we had a group from ENAC, the -- I'll say, the FAA of Italy was at Spaceport America. And one of the things that we've done has been able to adapt our pilot simulator. It can get geographically accurate in the world and look at various flight profiles and ways to go from the base in which we're talking about in Southern Italy. And, boy, you just even look at that video, you can imagine how glorious it is to not just look over the boot of Italy, but all of what you're seeing in Southern Europe there is pretty spectacular. So that's real progress being made against that.
I think I'm looking over to Mike Moses. I think that effort wraps up in 2025, the exploratory effort there. So we'll have some points of view by the end of this year about how we go forward in Italy, but it's a really good partnership and working relationship. You asked the question about TAM. I think you asked it specifically with the notion of an extra Spaceport.
I think the ability to go to space from everybody that we've taken up and everybody we've heard that has gone to space is so stunning and so impactful that people will really travel to where the opportunity is. If you wanted to climb Everest, you have to go to Everest. So I think people will travel for this, and they clearly are. We have our astronaut bases from all across the world, 60-plus countries. With that said, I think being able to see different parts of the world increases the frequency of repeat visitation on this.
I think it is not a one-and-done experience. And I think being able to have just the visceral experience of going and seeing the earth from space is worth doing multiple times. So when you can see different parts of the planet, I think that becomes an opportunity to not just go again, but then if you're going again, bringing other people. So that's one way, I'll call it, the individuals don't change, but the number of times an individual goes to space probably does. And I also think there's just something natural to having deeper penetration of a market when you're kind of around your home base.
And so I would imagine we'll see deeper penetration from Europe. If we have a spaceport in Italy, we'll see deeper penetration from Southeast Asia if we have a spaceport in Southeast Asia. Same thing in the Middle East. So we're excited to be over multiple places. But again, right now, we're just focused on New Mexico and bringing that spaceport up to full capacity.

Operator

That concludes our question-and-answer session. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.