"Virgin Galactic's partner Scaled Composites conducted a powered test flight of SpaceShipTwo earlier today. During the test, the vehicle suffered a serious anomaly resulting in the loss of the vehicle. The WhiteKnightTwo carrier aircraft landed safely."

So ran Virgin Galactic's statement Friday, announcing America's second loss of a commercial spaceship in the past week.

Virgin Galactic's WhiteKnightTwo -- seen here without the missing SpaceShipTwo. Photo: Wikimedia Commons.

The first incident, last Tuesday, happened when an Orbital Sciences (OA) Antares launch vehicle ferrying supplies from Earth to the International Space Station exploded moments after liftoff from the Wallops Island spaceport in Virginia. The second occurred three days later. Here's what we know about it (from combined news reports, statements from NASA, from contractor Sierra Nevada, and from Virgin Galactic and its founder, Sir Richard Branson:

What Virgin Galactic is
Virgin Galactic, a private company founded by Branson, is attempting to build a space tourism business in which it will send well-heeled travelers to the very edge of space -- about 62 miles above sea level -- there to float in zero gravity for about five minutes before returning to land on Earth. Passengers will make the trip aboard a spacecraft dubbed SpaceShipTwo (SS2), which will itself piggyback aboard a "mothership" aircraft dubbed WhiteKnightTwo (WK2) for the first leg of the trip.

Passengers will pay a reported $250,000 for the round trip -- a steep price that only the very wealthy will be able to afford. Yet already, Virgin Galactic says it has sold more than 580 tickets, including to celebrities such as Justin Bieber, Lady Gaga, and Stephen Hawking. (And yes, this is the first and last time you'll find those names all in a single sentence).

WK2 will take off, airplane-style, from Virgin Galactic's spaceport in the Mojave Desert. It will carry SS2 to an altitude of about 45,000 feet, release SS2, and then turn around to land back on Earth, again, airplane-style, on a runway. Meanwhile, after detaching from the mothership, SS2 will ignite its rocket engine, blast up to the edge of space, then float back down and land itself, also on a runway.

SpaceShipTwo, seen here attached to the underside of WhiteKnightTwo. Photo: Wikimedia Commons.

What happened on Friday
In Friday's test flight, Virgin Galactic planned to test a new type of fuel to power SS2 on its rocket flight into near-Earth orbit. Virgin Galactic had, at last report, planned to begin commercial space tourism flights sometime in 2015 (although the start date had been repeatedly postponed).

Unfortunately, around 10 am Pacific Time, and about two minutes after SS2 detached from its mothership, the only Virgin Galactic spaceship capable of carrying tourists into space exploded. One SS2 pilot was able to eject and parachute to safety, although he sustained serious injury. The other pilot perished. The crew of WK2 was not harmed.

What it means for consumers, investors, and Virgin Galactic
The high ticket price for Virgin Galactic's proposed space tourism service means that as a practical matter, the destruction of SS2 has little significance to most American consumers. We simply couldn't afford to take a ride on SS2, even if it hadn't blown up.

At the same time, with Virgin Galactic being a privately held company, its difficulties would also appear to have little impact on investors -- but there are some implications. So let's go over what Friday's disaster means for shareholders of the leading aerospace companies. 

Northrop Grumman
A company called "Scaled Composites" builds WK2 and SS2 for Virgin Galactic, and Scaled Composites also hired the test pilots, and ran the test, that ended in disaster Friday. Formerly a private company, Scaled Composites became a subsidiary of Northrop Grumman (NOC 0.77%) when Northrop bought it in 2007.

Virgin Galactic has reportedly spent $500 million on developing its WK2 and SS2 craft, with much of this money going to Northrop Grumman's subsidiary. If Virgin Galactic can recover from last week's disaster, and get its space tourism business plan back on track, the company could eventually buy dozens, or scores, of WK2 aircraft and SS2 spacecraft from Northrop Grumman's subsidiary.

The loss of SS2, however, represents a significant setback to Virgin Galactic. While the company has a second SS2 vessel under construction today, the loss of the original spacecraft will delay testing and development activities until a replacement can be completed. It's also possible that Virgin Galactic customers may get spooked by Friday's disaster, and begin demanding refunds on their tickets. Branson has assured customers that refunds will be available to customers who want them -- but if too many customers take him up on the offer, this could starve the company of needed cash.

If Friday's disaster ends up crashing Virgin Galactic's business, then Northrop Grumman, as its key supplier, could suffer as well.

At first glance unrelated to Virgin Galactic and SpaceShipTwo, Northrop rival Boeing (BA 0.52%) recently won a NASA award (shared with privately held SpaceX) to build spacecraft to ferry NASA astronauts to the International Space Station. Rival bidder Sierra Nevada Corporation, however, has contested NASA's awarding the contract to Boeing, saying that it -- Sierra Nevada -- actually offered NASA a better price.

NASA has responded that Sierra Nevada's Dream Chaser spacecraft, which it bid for the space taxi work, suffered from "technical uncertainty and schedule risk." NASA says this is why it decided not to hire Sierra Nevada despite its offering a price lower than Boeing's. Now here's where this all ties into Virgin Galactic's news: Up until May 2014, Sierra Nevada had been subcontracted to build rocket engines for SpaceShipTwo.

Sierra Nevada took steps to distance itself from the disaster last week, noting that its relationship with Virgin Galactic terminated in May, and that it had no "involvement in the engineering, manufacture or qualification testing of the motor used on this flight or in the integration of this motor to SS2." But the company may still suffer guilt by association from its prior involvement. Or it could turn out that the SS2 engine that blew up Friday was based in part on Sierra Nevada's prior work. Either way, this would strengthen NASA's case for rejecting Sierra Nevada's space taxi bid in September -- and improve the odds of Boeing's award surviving Sierra Nevada's challenge.

In an industry where all the upstarts have been seeing their rockets blow up lately, there's something to be said for Boeing's record of safety -- even if it does cost a lot.