Virgin Orbit, the rocket company spun off from billionaire Richard Branson’s spaceflight company, will lay off most of its staff and freeze operations after it failed to raise enough money from investors.
“We have no choice but to implement immediate, dramatic and extremely painful changes,” chief executive Dan Hart told employees, according to CNBC.
Virgin Orbit was founded by Branson in 2017 as a sister company to his larger spaceflight company, Virgin Galactic, with the goal of building flexible space launch systems. The company’s LauncherOne rockets are designed to be air-launched from a modified Boeing 747-400 carrier.
Whereas Virgin Galactic plans to build a business around ferrying rich tourists to space, Virgin Orbit is rooted in the satellite business, pitching its rockets as a way to deliver small payloads into orbit.
It achieved an early success in 2021 when it flew a rocket into orbit from the Mojave Air and Space Port in California. That was one of four successful launches for Virgin that delivered 33 payloads to their required orbits, according to a Virgin Orbit announcement.
Its first attempt at an orbital launch from the United Kingdom, seen as an important milestone for Britain, ended in failure in early January. The company’s rocket experienced an “anomaly” that led to a premature shutdown and failure to reach orbit, according to a statement from the company.
An investigation concluded that the initial phases of the launch had gone according to plan, which the company said constituted first-of-its-kind achievements for a launch from Western Europe. But a malfunctioning fuel pump filter later caused an engine to overheat and end its thrust too soon. It fell back to Earth and landed in the Atlantic Ocean.
The company also struggled financially. When it went public in 2021, it was valued at $3.7 billion, but it has lost money ever since and had problems funding its operations. In the third quarter of 2022, the most recent quarter for which detailed financials are available, the company reported a net loss of $43.6 million on revenue of $30.9 million.
The news comes after Virgin Orbit had already put in place a companywide “operational pause” on March 16 to save money while its leaders talked to funders and explored other options.
The layoffs will cost the company about $15 million, consisting of $8.8 million in severance payments and other employee benefits, plus about $6.5 million in costs related to finding outplacement services and other requirements of the Warn Act, a U.S. law covering mass layoffs. It will cover the severance costs through the sale of a convertible note to one of Branson’s other companies, according to an SEC filing.
The company’s stock plummeted 39 percent Friday morning to open trading to a share value of about 20 cents.