Virgin Orbit, the satellite launch company founded by Sir Richard Branson, has announced that it will cease operations “for the foreseeable future” after failing to secure additional funding. The company’s CEO, Dan Hart, made the announcement during an all-hands meeting on Thursday, where he also informed employees that around 90% of the company’s workforce would be laid off.
According to audio of the meeting obtained by CNBC, Hart said, “Unfortunately we’ve not been able to secure the funding to provide a clear path for this company”. He had been giving employees daily updates since Monday, when the company postponed a scheduled all-hands meeting to Thursday due to late-stage deal talks falling through with a pair of investors.
Hart told staff on Monday that “very dynamic” investment discussions were continuing. The discussions continued throughout the week, with Hart saying that leadership would share any updates “as quickly and transparently as we can,” according to copies of Hart’s emails from Tuesday and Wednesday also obtained by CNBC.
This week, the company has been bringing back more of its 750 employees from the operational pause and furlough it began on Mar. 15, after initially resuming some work with a “small team” on Mar. 22. Amid the broader pause, Virgin Orbit has been working to finish its investigation into the mid-flight failure of its previous launch, as well as finish preparations on its next rocket.
Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. However, the company’s last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.
The company has been seeking new funds for several months, with Sir Richard Branson unwilling to fund the company further. Virgin Orbit was spun out of Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.
Virgin Orbit’s stock closed at 34 cents a share on Thursday, having fallen 82% since the beginning of the year. The company hired bankruptcy firms to draw up contingency plans in the event it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company raised $60 million in debt from the investment arm of Virgin Group.
On the same day that Hart told employees that Virgin Orbit was pausing operations, its board of directors approved a “golden parachute” severance plan for top executives, in case they are terminated “following a change in control” of the company.
Virgin Orbit’s Challenges and Failures
Virgin Orbit’s journey to launch satellites into orbit has been a challenging one since its inception. The company was spun out of Virgin Galactic in 2017 and aimed to create a new kind of rocket launch system that could deliver small satellites to space.
However, the company faced multiple setbacks and delays in the development of its rocket launch system. Virgin Orbit’s system uses a modified Boeing 747 jet to carry the rocket, called LauncherOne, to a high altitude before releasing it into space. The rocket then ignites its engines and enters orbit, delivering its payload of satellites.
The company’s first orbital test flight, which took place in May 2020, was a failure. The rocket did not reach orbit and crashed into the Pacific Ocean. The company later determined that the failure was caused by a breach in a high-pressure line that led to a loss of propellant.
Despite the setback, Virgin Orbit continued to work on its rocket launch system, conducting additional test flights and making improvements.