Due to immense financial challenges that have made many businesses in emerging technologies suffer, Virgin Orbit Holdings Inc., a satellite launch company affiliated with British Businessman Richard Branson, is stopping its operations permanently.
During a meeting on Thursday, the CEO of Virgin Orbit, Dan Hart, told their staff that the company is ceasing operations after being unable to secure funding.
According to Dan Hart, the company decided to secure the business and escape from the foreseeable future which might bring a financial crisis there. Nearly all of the company’s employees would lose their jobs.
Virgin Orbit said on Thursday that it would be firing 675 workers, or around 85% of its workforce, in a filing. The business decided to do this after failing to find further funding.
Virgin Orbit has suspended its operations and the company will be shut down by the remaining 15% of employees. Due to the quick loss in business that was reinforced by a high-profile launch failure in January and a severe decline in stock price, Virgin orbit has decided to suspend operations.
With desirable cash payment, an extension of benefits, and assistance in finding a new job, Virgin Orbit would offer a severance package for every departing employee. Hart said that a direct channel has been established with sister business Virgin Galactic for hiring.
After Virgin Orbit abruptly postponed a scheduled all-hands meeting on Monday, Hart has been providing the company’s staff with quick brief updates.
late-stage deal conversations had broken down with two investors over the weekend, but Hart informed colleagues on Monday that extremely lively investment discussions were still going on.
The future of Virgin Orbit was initially optimistically presented by officials. However, Virgin Orbit formally informed investors in February that it had raised an extra $10 million from Branson’s Virgin Investments Limited, escalating investors’ fears about the company’s ability to pay its bills.
More staff have been gradually returning to work this week due to the company’s operational pause and layoff, which started on March 15.
After the disclosure, shareholders sold off the company in extended trading on Thursday, with shares falling more than 40%. At the end of the regular trading session, Virgin Orbit stock had dropped 82% to settle at 34 cents per share.
Virgin Orbit created a system that launches rockets from under the wing of a modified 747 jet in mid-flight to launch satellites into orbit. However, the company’s most recent mission was aborted mid-flight due to a launch-related problem, which prevented the rocket from reaching orbit and ultimately caused it to fall into the sea.
Virgin Orbit was one of just a handful of American rocket firms to use a launch system that was independently developed and successfully entered space. It has been attempted six times, with four missions succeeding and two failing since 2020.
As the majority owner Sir Richard Branson has refused to continue funding the business, it has been looking for new funding for a few months now.
Richard Branson has a 75% share of Virgin Orbit, which was founded in 2017 as a spinoff of his Virgin Galactic firm. The second-largest interest is held by Mubadala, the Emirati sovereign wealth fund, with 18% of the total.
In the past, the business employed bankruptcy law firms to create backup plans in case it couldn’t find a buyer or investor. The fact that Virgin Orbit borrowed $60 million from Virgin Group’s investment arms means that Branson has a first preference for all of the company’s assets.
The authorities of Virgin Orbit approved a severance plan for top executives on the same day that Hart informed staff that the company was stopping its operations. This was done in case these executives were fired following a change in control of the business.
The Long Beach, California-based business is one of many startups in the space sector whose shares have fallen as investors turn away from unproven business strategies and losses-making ventures despite once-high valuations.
As a division of Virgin Galactic, Virgin Orbit was first established in 2017 with a focus on the orbital insertion of small satellites. By combining with corporations that write blank checks in 2021, the business went public.
Unlike Virgin Galactic, which focuses on taking people to the edge of space and back, Virgin Orbit’s primary business is the launch of tiny satellites.
Virgin Orbit and NextGen Acquisition Corp underwent a SPAC merger on December 30, 2021. The merger resulted in the creation of a publicly traded corporation with the NASDAQ ticker code. Virgin Orbit’s stock worth at the SPAC transaction was $3.7 billion.
Virgin Orbit sets itself apart from some of its rivals by launching its LauncherOne rocket from beneath the wing of a modified Boeing Co. 747 aircraft at a great height.
Before formally establishing its satellite-launch business, the corporation started working on the rocket during its early years at Virgin Galactic.
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Virgin Orbit achieved a significant business milestone in January 2021 when it successfully launched its first flight into orbit. Up to 2022, it managed to accomplish four more successful flights.
Before the failure of its January flight, Virgin Orbit had intended to increase the number of launches it conducted in 2021. The attempt ultimately failed, despite being the first orbital launch from British soil.
Nine tiny satellites were lost when the LauncherOne rocket was unable to reach orbit due to an issue with a fuel filter during the flight. The company had to review its strategies after the launch’s failure and briefly halt operations as it looked for further finance.
Virgin Orbit declared its stopping of operations earlier this month while also looking for extra finance. The ceasing of operations was caused due to technical and capital management.
For the first time in nine months of 2022, Virgin Orbit reported a loss of $139.5 million.
All but 100 of Virgin Orbit’s 775 employees, or around 85% of its workforce, were fired after the company was unable to acquire more funding, and activities were put on indefinite hold. Board members had previously authorized golden parachute schemes for executives.
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