Branson unearthed the 747 aircraft acquired from Virgin Orbit.
Eric Berger
Now it’s official: The Virgin Orbit launch vehicle is being sold for parts. In a new filing as part of the bankruptcy filing, Rocket Lab bought the company’s main manufacturing facility in Long Beach, California to support its neutron rocket. Stratolaunch purchased the Boeing 747 aircraft and related equipment from Virgin Orbit. And Launcher acquired the company’s lease on a proving ground in Mojave.
That’s it. After six years, Virgin Orbit is complete and its LauncherOne will no longer fly. The purpose of this article is not to criticize the company’s technology or people. In fact, the engineering teams did a great job dropping a liquid rocket from a 747 plane, firing its engine and launching it into space.
No, the problem was Virgin Orbit’s management, including CEO Dan Hart and its founder Sir Richard Branson. Because of her leadership, the company had a terrible, unworkable business plan and compounded these problems by hiring an unsustainable workforce of 700 people.
origins
Virgin Orbit originated more than a decade ago as an offshoot of Virgin Galactic, which used an airplane as a first stage to launch a tourist suborbital spaceplane. In the early years, the company hired several SpaceX engineers to develop a rocket that could be launched from an airplane.
That business ran relatively slim until Virgin Orbit split from its parent company in 2017 and hired Branson Hart, who had worked for decades as a systems engineer in Boeing’s space division, as president. Hart took a more cautious approach and began to add staff to the company. A planned first launch in 2018 was delayed by more than two years.
When LauncherOne finally took off for the first time in May 2020, the company had poured an incredible amount of money, almost $1 billion, into developing the rocket and air launch system. It was clear at the time that Virgin Orbit would never get that money back, charging $12 to $15 million to launch a few hundred kilograms per mission.
It also seemed fairly obvious that Virgin Orbit would not be able to break even with the large workforce that Hart had hired. The company’s labor costs alone were probably about $150 million per year, and that did not include facilities, leasing, equipment, and hardware costs. Assuming $10 million in profit per launch — an extremely generous number — Virgin Orbit would need to launch about 30 times a year to break even.
There was clearly no market for it, and even reaching such a frequency would have taken several years. Rocket Lab, which has a proven, similarly sized vehicle in Electron, sees demand for only about a dozen flights a year to special orbits. SpaceX has also tapped into the Virgin Orbit market with its transporter ride-sharing missions. The business case just wasn’t completed.
Other small launchers have solved this dilemma by upgrading to a much larger rocket, such as SpaceX with the Falcon 9 in 2009, Rocket Lab with Neutron, and Relativity Space with Terran R more recently. But Virgin Orbit was limited by the size of rocket its 747 aircraft could carry. Even at a time of incredible exuberance for space companies going public through Special Purpose Acquisition Companies (SPACs), public markets seemed to understand this.
In 2021, Virgin Orbit sought to meet its short-term cash needs by going public through SPAC. However, the funds raised through this merger were far less than expected. In announcing its intention to go public, Virgin Orbit said it expects to raise $383 million from the proceeds of the SPAC transaction, but has only raised $68 million through the process and is instead relies on private investment for an additional $160 million to keep operations running. Sources say Hart has done little to curb spending despite tightening financial resources.
end up
There was really only one lifeline left for Virgin Orbit. It required the UK or US government to step in and rule that the company was providing an essential service. Hopes of UK government intervention faded in January after a much-hyped launch from Cornwall, England, failed.
That left the US government. And sources say there were serious discussions in the US Space Force this month about promising contracts and other financial support for bidders in Virgin Orbit’s bankruptcy proceedings should the winner keep the company together and keep flying. But in the end, that support couldn’t overcome the terrible business model.
And why should the US government even be so interested? Certainly, the military was desperate for the possibility of “responsive launch”, meaning that if it were to lose some satellites during a conflict, it would be nice to have the ability to launch new ones if needed. With an aircraft as its first stage, Virgin Orbit could reach any orbit at any time, launching from a variety of runways around the world.
Maybe so, but Orbital Sciences developed this capability more than three decades ago with the Pegasus rocket, now operated by Northrop Grumman. Like LauncherOne, Pegasus is dropped from an airplane and can launch from locations around the world. Arguably more responsive as a solid fuel booster.
But there was almost no demand for the rocket. Pegasus has only been launched four times in the last decade, with a single one of those missions flying for the US military.