Virgin Orbit is furloughing nearly all its employees and pausing operations for a week as it looks for a funding lifeline, people familiar with the matter told CNBC.
Company executives briefed staff on the situation in an all-hands meeting at 5 p.m. ET on Wednesday, according to people who were in the meeting. The furlough is unpaid, though employees can cash in PTO, with only a small team continuing to work. Virgin Orbit is also moving up payroll by a week to Friday.
In the all-hands, company leaders told employees that they aimed to provide an update on the furlough and funding situation by next Wednesday or Thursday, according to the people, who requested to remain anonymous to discuss internal matters.
Five days ago:
Virgin Orbit stock (VORB) is down 11.8% to US$ 0.89/share in after-market trading. This is down 91% from the US$ 10 SPAC offering price.
More a victim of their launch failure on 2023-01-09, as reported here. At the time, Jeff Foust of SpaceNews reported:
The failure comes at a precarious time for Virgin Orbit, which has struggled to increase its launch rate and generate revenue. The company, in a Nov. 7 earnings call, reported it closed the third quarter with $71 million in cash, after reporting negative free cash flow of $52.5 million. The company raised $25 million from Virgin Group in early November and another $20 million from Virgin Investments Limited, an investment arm of the Virgin Group, Dec. 20.
With competition growing in the small satellite launch market, and Rocket Lab and SpaceX (with their ride share Transporter missions) offering comparable services and a record of reliability, it’s hard to raise money after a launch failure that deposited nine customers’ satellites in the drink and only four successes in six attempts.
All of the venture capital herd is now stampeding into artificial intelligence and space is yesterday’s Current Thing.
Virgin Orbit is ceasing operations “for the foreseeable future” after failing to secure a funding lifeline, CEO Dan Hart told employees during an all-hands meeting Thursday afternoon. The company will lay off nearly all of its workforce.
“Unfortunately, we’ve not been able to secure the funding to provide a clear path for this company,” Hart said, according to audio of the 5 p.m. ET meeting obtained by CNBC.
“We have no choice but to implement immediate, dramatic and extremely painful changes,” Hart said, audibly choking up on the call. He added this would be “probably the hardest all-hands that we’ve ever done in my life.”
The company will eliminate all but 100 positions, amounting to about 90% of the workforce, Hart said, noting the layoffs will affect every team and department. In a securities filing, the company said the layoffs constituted 675 positions, or approximately 85%.
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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 at 18%.
The company previously hired bankruptcy firms to draw up contingency plans in the event it was 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.
It is interesting that Virgin Orbit’s 747 launch plane, “Cosmic Girl”, and support equipment was bought by Stratolaunch, LLC, which operates the giant “Roc” aircraft as a launch platform for hypersonic test vehicles. This was described as a “stalking horse” bid for a sale which had been previously arranged between Virgin Orbit and Stratolaunch.
