(Bloomberg) — Virgin Orbit Holdings Inc., the satellite launch company linked to British billionaire Richard Branson, is indefinitely suspending operations, succumbing to mounting pressures from the liquidity crisis that has paralyzed start-ups in many emerging technologies.
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The company said in a filing filed Thursday that it would cut 675 jobs, or about 85% of its workforce, “to reduce spending amid the company’s inability to secure meaningful funding.” A Virgin Orbit spokesman said the remaining 15% of employees would work to complete the deal.
The move interrupts a rapid decline following January’s high-profile launch failure and a plunge in the stock price. Virgin Orbit temporarily suspended operations earlier this month while it sought additional capital. The company — part of Branson’s empire that also includes airline Virgin Atlantic and space company Virgin Galactic Holdings Inc. — has not turned a profit as a public company.
Virgin Orbit shares are down 45% in New York extended trading as of 7:20 p.m. to trade at just 19 cents each. The stock was worth more than $7 a year ago. The cost will total about $15 million, consisting primarily of $8.8 million in severance and benefits and $6.5 million in other costs such as outplacement services, Virgin Orbit said in the filing .
Just two weeks ago, the company approved a top executive severance plan, under which Chief Executive Officer Daniel Hart expects to receive twice his base salary, a cash payment equal to his prorated annual target bonus, and as much as six months of health insurance coverage.
The Long Beach, Calif.-based company is one of several space-related startups with once lofty valuations whose shares have plummeted as investors balked at untested business models and loss-making deals. Astra Space Inc. reported on Thursday that its cash and cash equivalents fell 32% in the quarter ended December 31, and Rocket Lab USA said last month that its quarterly loss will be three times what analysts had estimated.
According to a person familiar with the matter, Virgin Orbit is still trying to sell all or part of its business. Those talks of a possible transaction don’t include Matthew Brown, a little-known Texas venture capitalist, who earlier this month said he was interested in a deal, said the person, who asked not to be identified, revealing private conversations.
Just a year ago, Brown had touted himself as a possible savior of a billion-dollar company. But his funding deal fell through over the weekend, CNBC reported March 27.
The launch company officially began as a spin-off of Virgin Galactic in 2017 before going public in 2021 through a combination with a blank check company. Virgin Orbit’s business focused on launching small satellites into orbit, as opposed to Virgin Galactic’s focus on sending humans to the edge of space and back.
Unlike some competitors that launch rockets from the ground, Virgin Orbit uses a technique known as air launch, deploying the LauncherOne rocket at high altitude under the wing of a modified Boeing Co. 747 aircraft. The company began development of the rocket at Virgin Galactic years before the satellite launch business was officially formed.
Virgin Orbit successfully launched its first mission into orbit in January 2021 and completed four successful flights by 2022.
The company had planned to increase its launch frequency this year but had to reassess after the failed January mission, which was slated to be the first orbital launch from UK soil. Its craft never made orbit after an in-flight problem with a fuel filter, resulting in the loss of nine small satellites.
(Updates with costs, severance pay in fourth, fifth paragraph.)
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