Virgin Orbit is halting operations indefinitely due to a failure to secure crucial funding, CEO Dan Hart announced during a company-wide meeting on Thursday. The company will be laying off almost its entire workforce as a result.
Hart stated during the meeting, obtained by CNBC, that they were unable to obtain the necessary funding to maintain a viable path for the company. He emotionally declared that they had no choice but to take "immediate, dramatic and extremely painful changes." This will result in cutting all but 100 positions, which equates to approximately 90% of the workforce. A securities filing revealed that this amounts to 675 positions or around 85%.
Hart expressed his deep appreciation for the team, promising his continued support for those who will stay on and those who will have to find new opportunities elsewhere. A severance package will be provided to each departing employee, including a cash payment, extended benefits, and assistance in finding new employment. Virgin Galactic, Virgin Orbit's sister company, has set up a "direct pipeline" for hiring.
Since Monday, Hart has been providing daily updates to the company's employees. This followed the delay of a scheduled all-hands meeting at the last minute when late-stage talks with a pair of investors fell through over the weekend. Despite this, Hart informed the staff on Monday that "very dynamic" investment discussions were ongoing.
While the operational pause and furlough began on March 15, the company had been gradually bringing back more employees. Virgin Orbit was working on concluding its investigation into the mid-flight failure of its previous launch and completing preparations for its next rocket. After the announcement, Virgin Orbit's stock plummeted more than 40% in extended trading on Thursday. Shares closed at 34 cents at the end of the regular session, a decline of 82% since the beginning of the year.
Virgin Orbit developed a satellite-launching system using a modified 747 jet to drop a rocket from under the aircraft's wing mid-flight. However, the company's last mission suffered a mid-flight failure when the rocket failed to reach orbit and crashed into the ocean.
Since 2020, Virgin Orbit has launched six missions, with four successes and two failures. The company had been seeking new funding for several months, but majority owner Sir Richard Branson was unwilling to contribute further. Branson's Virgin Galactic spun off Virgin Orbit in 2017, and he remains its largest stakeholder with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake at 18%.
