Virgin Orbit to Cease Operations and Lay Off Nearly All Employees After Failing to Secure Funding

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Virgin Orbit, the satellite launch company founded by British billionaire Richard Branson, is ceasing operations “for the foreseeable future” after failing to secure a funding lifeline. The California-based company has been struggling to find new funds for several months, and the late-stage deal talks with a pair of investors fell through over the weekend. The news of the company‘s inability to secure new funding was confirmed by Virgin Orbit CEO Dan Hart during an all-hands meeting with employees on Thursday afternoon. Hart told the employees that the company would lay off about 90% 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 meeting obtained by CNBC. “We have no choice but to implement immediate, dramatic, and extremely painful changes.”

Virgin Orbit had earlier furloughed nearly 600 of its employees and suspended operations after a failed satellite launch. The company then said in an SEC filing that it would start an “incremental resumption of its operations.” This week, the company had been steadily bringing back more of its over 750 employees from the operational pause and furlough it began on March 15.

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. 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 is the sister company of Virgin Galactic, which is focused on space tourism. Virgin Orbit was spun out of Virgin Galactic in 2017, and Branson has been its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.

The news of the company’s inability to secure new funding caused a significant drop in its stock price. Shares of Virgin Orbit fell 39.75% or $0.14 in after-hours trading, to $0.20 as of 6:26 p.m. EDT on Thursday. The company’s stock has fallen 82% since the beginning of the year, closing at 34 cents a share on Thursday.

The company had 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.

Virgin Orbit is not the only space company to suffer setbacks in recent months. In February, Jeff Bezos’ Blue Origin announced that it would lay off about 6% of its workforce, or roughly 300 employees. Meanwhile, SpaceX’s recent successful launches have been a bright spot in the industry, and the company has been expanding its reach, recently winning a contract to launch a lunar lander for NASA.

In conclusion, Virgin Orbit’s failure to secure new funding has led to the company’s decision to cease operations “for the foreseeable future” and lay off about 90% of its workforce. The company had been struggling for several months and had furloughed nearly 600 of its employees earlier this month after a failed satellite launch. The news of the company’s inability to secure new funding caused a significant drop in its stock price, which has fallen 82% since the beginning of the year. Virgin Orbit is not the only space company to suffer setbacks in recent months, and the industry remains volatile, with successes and setbacks for different companies.

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