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Virgin Orbit will lay off 85 per cent of its workforce after the satellite launch business failed to find new funding in the face of a cash crunch.
Shares in the group, founded by Sir Richard Branson in 2017, tumbled sharply in out-of-hours trading in New York last night after it announced it would cut 675 jobs “in order to reduce expenses in light of the company’s inability to secure meaningful funding”.
Earlier this month, Virgin Orbit paused operations and furloughed almost all its staff as it scrambled to shore up its financial position. Talks over a $200 million lifeline fell through.
The business is now ceasing operations “for the foreseeable future”, Dan Hart, president and chief executive of Virgin Orbit, is said to have informed staff yesterday.
“Unfortunately we’ve not been able to secure the funding to provide a clear path for this company,” he told an all-hands meeting, according to CNBC, the financial news network.
A stock market filing confirmed the sweeping redundancies. Shares in Virgin Orbit slumped 15 cents, or 43.5 per cent, to 19 cents on Nasdaq during after-market trading following the announcement. The firm expects to incur charges of about $15 million from the lay-offs, funded in part by $10.9 million in financing from Branson’s Virgin Investments vehicle.
Virgin Orbit, spun off from Branson’s Virgin Galactic sub-orbital tourism group in 2017, went public in January last year with a valuation of $3.7 billion after a “blank cheque” merger with a special purpose acquisition company.
Based in Long Beach, California, it had promised to transform access to space by using a customised 747 jet as a mobile launch site, releasing a rocket able to carry small satellites into orbit.
But life on the stock market has been challenging. Virgin Orbit is valued at about $222 million, having lost 90 per cent of its value over the past year. The group suffered a setback in January, when its first attempt to launch a satellite into space from Cornwall failed because of a faulty fuel filter.
Discussions with Matthew Brown, a Texas-based venture capitalist, are said to have collapsed this weekend. When the prospect of a deal with Brown was first reported this week, the news lifted the shares and provided some respite from a continuing slide. They have fallen in value by 81 per cent so far this year.