The crash of the vehicle, undergoing its first powered test flight since January over the Mojave Desert, 95 miles (150 km) north of Los Angeles, came days after another private space company, Orbital Sciences Corp, lost a rocket in an explosion moments after liftoff in Virginia.
The back-to-back accidents dealt a considerable blow to the fledgling commercial space launch industry, which has been taking on more work traditionally done by the U.S. government while expanding for-profit space markets, including tourism.
Television footage of the Virgin Galactic crash site showed wreckage of the spacecraft lying in two large pieces on the ground, and the company said the spacecraft was destroyed. Kern County Sheriff Donny Youngblood said a debris field was spread over more than a mile.
The co-pilot of the spaceship was killed in the crash, while the pilot, who ejected and parachuted to the ground, survived with serious injuries, Kern County Sheriff's spokesman Ray Pruitt said. The pilot was found at the scene and taken to a local hospital, he said.
Stuart Witt, chief executive of the space port, said officials were not ready to "speculate on the cause" of the crash. The National Transportation Safety Board said it was sending one of its "go-teams" to investigate the accident.
The crash occurred shortly after the craft, dubbed SpaceShipTwo, separated from the jet aircraft that carried it aloft for its high-altitude launch, according to the Federal Aviation Administration.
Branson said via Twitter that he was on his way to Mojave following the crash. "Thoughts with all @virgingalactic & Scaled," he tweeted, referring to the company, Scaled Composites, which designed and built the spacecraft for Virgin.
George Whitesides, chief executive of Virgin Galactic, said he expected Branson to arrive by Saturday morning.
"Space is hard, and today was a tough day. We are going to be supporting the investigation as we figure out what happened today, and we’re going to get through it," he told a news conference at the space port.
He added: "We believe we owe it to the folks who were flying these vehicles as well as the folks who have been working so hard on them, to understand this and to move forward, which is what we’ll do."
PAYING CUSTOMERS MUST WAIT
More than 800 people have paid or put down deposits to eventually fly aboard the spaceship, which is hauled to an altitude of about 45,000 feet (13.7 kms) and released by Virgin's White Knight Two carrier jet airplane. The spaceship then fires its rocket motor to catapult it to about 62 miles (100 km) above Earth, giving passengers a view of the planet set against the blackness of space and a few minutes of weightlessness.
The vehicle is based on a prototype, SpaceShipOne, which 10 years ago won the $10 million Ansari X Prize for becoming the first privately developed manned spacecraft to fly in space.
"During the test, the vehicle suffered a serious anomaly resulting in the loss of SpaceShipTwo," Virgin said in a statement, adding: "We will work closely with relevant authorities to determine the cause of this accident and provide updates ASAP."
In May, Scaled Composites, a subsidiary of Northrop Grumman Corp, switched to an alternative plastic-type of fuel grain for the hybrid rocket motor.
The crash was the second accident this week involving a commercial U.S. space company. On Tuesday, an Antares rocket built and launched by Orbital Sciences exploded 15 seconds after liftoff from Wallops Island, Virginia, destroying a cargo ship bound for the International Space Station.
Friday's crash was a major setback for Virgin Galactic, a U.S. offshoot of billionaire Branson's London-based Virgin Group. The company was aiming to make the world's first commercial suborbital space flights with SpaceShipTwo, a six-passenger, two-pilot spacecraft.
The flight was to have been the first in a series of test flights leading up to Virgin Galactic's first flight beyond Earth's atmosphere.
Virgin ultimately was planning to add four more suborbital spacecraft to its fleet, along with a second White Knight carrier jet. Plans call for the fleet to fly out of a new commercial space port in Las Cruces, New Mexico, once the company completes all test flights and is certified for passenger service to begin.
Virgin Galactic's Whitesides told a Toronto space conference earlier this month that a second spacecraft was already under construction and about 60 percent complete.
Other companies developing passenger suborbital spacecraft include privately owned XCOR Aerospace, which is building a two-person space plane called Lynx, and Blue Origin, a startup space company owned by Amazon.com Inc founder Jeff Bezos.
Virgin Galactic also plans to use its White Knight Two carrier jets to launch small satellites and payloads into orbit.