British billionaire Richard Branson’s Virgin Orbit has paused operations as the rocket-launch company searches for more funding.
The Long Beach company announced the operational pause Wednesday and it went into effect Thursday. As part of the move, Virgin Orbit has furloughed most of its nearly 700 employees. Those employees will continue to have benefits during this time, according to a person familiar with the matter who wasn’t authorized to speak publicly.
The company expects the pause to continue through Tuesday, according to a document filed with the U.S. Securities and Exchange Commission. The operational pause will allow Virgin Orbit to save money while company executives meet with “potential funding sources” and explore “strategic opportunities,” according to the document.
The company is looking at updating employees on the situation sometime next week, according to the source.
Founded in 2017 as an offshoot of Branson’s spacecraft manufacturing and space-tourism companies, Virgin Orbit launches satellites via a rocket that blasts off from beneath the wing of a modified Boeing 747 jetliner.
The company has had four successful launches so far and counts small-satellite firm Spire Global and the U.S. Space Force, among others, as customers.
Analysts and industry experts have long expected the competitive and crowded small-satellite launch business to shake out weaker players. Now with interest rate increases and the overall economic climate, that shake-up could be happening, although a bit prematurely, said Greg Autry, director of space leadership, policy and business at the Arizona State University Thunderbird School of Global Management.
“It’s just not a good time to raise another funding round, and clearly they needed one,” he said of Virgin Orbit. “It’s hard to finance these capital-intensive projects.”
However, the company’s unique air-launch capability and the strong demand among commercial and military customers for satellite launches give Autry confidence that Virgin Orbit will survive.
“The technology works, and there’s a market for it,” he said.
That air-launch capability allows Virgin Orbit to launch from just about anywhere with a runway. The company’s competitors mostly rely on traditional launch pads.
The company launched its first demonstration mission in 2020, but it had a launch failure earlier this year when the rocket’s upper stage shut down prematurely. The failure resulted in the loss of nine satellites.
Virgin Orbit said in a statement Thursday that its investigation of the incident is “nearly complete” and that it is in the final stages of testing the newly modified rocket.
The company reported revenue of $30.9 million and a net loss of $43.6 million in the third quarter of 2022, compared with no revenue and a $38.6-million loss a year earlier.
In a November quarterly earnings call, Chief Financial Officer Brita O’Rear told analysts that the company had “strong backing” from current shareholders, including a $25-million convertible investment from Virgin Investments, which is part of Branson’s Virgin Group. The company finished the third quarter with cash and cash equivalents of just over $71 million, she said.
“We will be opportunistic in the capital markets to fund our growth,” she said during the call.
Shares of Virgin Orbit fell 29.7% to 71 cents Thursday. The stock has been in steady decline since December 2021, when it debuted at $10 a share.
Samantha Masunaga - Los Angeles Times