Virgin Orbit's turbulent times: What led to the shutdown
What's the story
Virgin Orbit, the Richard Branson-owned satellite company that almost launched Western Europe's first orbital satellite, is shutting down operations "for the foreseeable future." The embattled company has been struggling to secure additional funding and, as a result, announced an operational pause earlier this month. The company is also laying off nearly all of its workforce.
Context
Why does this story matter?
Virgin Orbit rose to fame due to its peculiar way of launching satellites. Instead of launching vertically from the ground, the company uses a modified Boeing 747 to air-launch rockets. The company was initially ahead of its competitors with four successful missions under its belt. However, its failure to launch a mission from the UK affected the company's credibility.
Layoffs
The company will axe 675 employees
Virgin Orbit will fire around 90% of its workforce. All but 100 positions will be eliminated. Per a Securities and Exchange Commission (SEC) filing, the company is axing 675 employees. Every departing employee will get a severance package with cash payment, an extension of benefits, and support in finding a new job. The company offered a "direct pipeline" with sister company Virgin Galactica.
Cash burn
Virgin Orbit has been burning cash for a while
Much before it failed to launch a satellite from the UK, Virgin Orbit was burning cash. In the three months that ended in September 2022, the company had a net negative cash flow. The company had $71.2 million in cash at the end of the quarter compared to $1.194 billion year-over-year. Till September 2022, its net losses were $139.5 million.
Funding
The company couldn't raise any funds
The company has been trying to raise funds to fight off bankruptcy for a while. It even hired bankruptcy firms to draw up contingency plans. Virgin Orbits raised $60 million from Branson's Virgin Group, but even he seems done funding the company. The firm was in talks with Mathew Brown Companies to raise $200 million, but that did not work out as well.
Official words
Company has no choice but to implement painful changes: CEO
"Unfortunately, we've not been able to secure the funding to provide a clear path for this company," said CEO Dan Hart. "We have no choice but to implement immediate, dramatic, and extremely painful changes," Hart said, audibly choking in an audio obtained by CNBC. "This company, this team — all of you — means a hell of a lot to me," he added.