Virgin Galactic (SPCE -4.73%) has faced challenges launching its space tourism rockets into space, and a complex design and manufacturing process has caused delays. The company is essentially designing from scratch both rockets that go into space and the "mother ship" that carries a rocket from the ground to about 50,000 feet.

An agreement announced last week will allow Virgin Galactic to lean on Boeing (BA 0.27%) subsidiary Aurora Flight Sciences to create next-generation mother ships and focus internal development on space. In theory, this will give the company more focus and the potential to scale even more quickly. 

Virgin Galactic mothership concept from Aurora Flight Sciences.

Image source: Virgin Galactic.

Boeing steps in to build the mother ship

Boeing's agreement with Virgin Galactic, through Aurora Flight Sciences, is fairly straightforward. The company will both design and manufacture the next-generation mother ships that Virgin Galactic will use to get rockets to their launch height. 

This partnership will leverage Boeing's overall scale and expertise and Aurora's niche of building unique aircraft. The company has built high-altitude aircraft, drones, and urban mobility planes. The cost of the deal wasn't announced, but now that it's moving closer to launching commercial operations and knows the advantages and disadvantages of the technology it's developed, Virgin Galactic is probably looking to offload parts of the design process to someone with more expertise. 

Building scale

What's interesting about this announcement is that Virgin Galactic is partnering with Boeing to scale the business more quickly. CEO Michael Colglazier said Aurora will make the mother ship "faster to produce [and] easier to maintain and will allow us to fly substantially more missions each year." 

The figure Virgin Galactic is still shooting for is 400 flights per year from Spaceport America with two new mother ships. It's estimated these aircraft will enter service in 2025, which is relatively soon for a new aircraft to launch, adding another layer of risk. 

We know that Virgin Galactic is also producing more of its own rockets that actually fly into space. So using its internal capacity on rocket production while leaning on Boeing for mother ship manufacturing makes sense if scale is the goal. 

The upside for Virgin Galactic

If the Aurora deal does allow Virgin Galactic to scale more quickly, it could be great for the business. The stated goal in last week's press release was 400 flights per year from the current spaceport although the timing of that level of scale is uncertain (definitely after 2025). The current price point of at least $400,000 per passenger and six seats per spacecraft has a revenue potential of at least $960 million per year. 

Virgin Galactic's current market cap is $1.9 billion, and if the company can get off the ground and if it can start scaling the space tourism business, this could be a great growth stock trading at a reasonable value. But notice there are a lot of "ifs" in that statement. 

There's a lot of risk for Virgin Galactic, and more delays to commercial launch, which is expected sometime next year, should be expected based on historical trends. But the risk/reward is looking attractive, especially now that Virgin Galactic can put its entire focus on the spacecraft.