Virgin Orbit, the satellite launch startup owned by Richard Branson’s Virgin Group, will cease operations for the foreseeable future and let go of nearly all staff after a last-minute effort to raise money fell through, CEO Dan Hart told employees at a company meeting yesterday (March 30) afternoon. Virgin Orbit shares plunged more than 41 percent today (March 31) to below $0.20. Its stock price is down 90 percent since the beginning of the year.
“Unfortunately, we’ve not been able to secure the funding to provide a clear path for this company,” Hart told employees at an all-hands meeting yesterday. “We have no choice but to implement immediate, dramatic and extremely painful changes.” Hart choked up at one point, according to a recording of the meeting obtained by CNBC.
Virgin Orbit will eliminate 675 positions across all departments, or 85 percent of its total staff, according to an SEC filing dated March 30. Hart said the company will provide severance packages for all departing employees and help them find new jobs through a “direct pipeline” set up with Virgin Galactic, Branson’s other space venture.
On March 16, Virgin Orbit abruptly paused operations and furloughed most of its staff amid a cash crunch. The company moved quickly to look for outside investors and, within days, was poised to raise $200 million from Matthew Brown, a Texas venture capitalist. However, the deal fell through.
Virgin Orbit, founded in 2017, provides launch services for small satellite operators using a modified Boeing 747 aircraft with a small rocket attached under one of its wings. To date, it has successfully launched four satellite missions for business clients, but launch revenue is far from enough to offset the cost of running a space company.
In its latest quarter ending, in September, Virgin Orbit reported a $43 million loss on $31 million in sales. The company subsequently raised $60 million in debt from Virgin Investments Limited (VIL), an investment subsidiary under the Virgin Group. Its latest effort to raise outside funding suggested Branson, who owns about 75 percent of Virgin Orbit, was unwilling to fund the company any further.
Virgin Group’s recent debt financing gave Branson the first priority over Virgin Orbit’s assets, including its Boeing 747 aircraft, in the event of bankruptcy.