- Virgin Orbit is ceasing operations “for the foreseeable future” after failing to secure a funding lifeline, CEO Dan Hart told employees during an all-hands meeting on Thursday.
- The company will lay off about all but about 100 employees, according to audio of the 5 p.m. ET meeting obtained by CNBC.
- Shareholders dumped the stock in extended trading on Thursday.
The company’s 747 “Cosmic Girl” jet releases a LauncherOne rocket in the air for the first time during a drop test in July 2019.
Greg Robinson / Virgin Orbit
Virgin Orbit is ceasing operations “for the foreseeable future” after failing to secure a funding lifeline, CEO Dan Hart told employees during an all-hands meeting Thursday afternoon. The company will lay off almost all of its workforce.
“Unfortunately, we weren’t able to secure the funding to provide a clear path for this company,” Hart said, according to audio of the 5 p.m. ET meeting obtained by CNBC.
“We have no choice but to make immediate, dramatic and extremely painful changes,” Hart said, choking on the call. He added that these were “probably going to be the hardest all-hands we’ve ever done in my life”.
The company will cut all but 100 jobs, which make up about 90% of its workforce, Hart said, noting that the layoffs would affect every team and department. In a securities filing, the company said the layoffs accounted for 675 jobs, or about 85%.
“This company, this team – you all – mean a hell of a lot to me. And I haven’t and won’t stop supporting you, whether you’re on the journey here or elsewhere,” Hart said.
Virgin Orbit will “provide severance for each departing employee,” Hart said, with a cash payment, a benefit extension and assistance in finding a new job — with a “direct pipeline” working with sister company Virgin Galactic for recruitment is set up.
Hart has briefed company employees daily since Monday, when Virgin Orbit delayed a scheduled all-hands meeting at the last minute. Late-stage talks with two investors had stalled over the weekend, but Hart told staff Monday that “very dynamic” investment talks were continuing.
Those investor calls continued this week — with Hart previously saying leadership would share any updates “as promptly and transparently as possible,” noting that email leaks “is against company policy,” according to copies of Hart’s E -Mails from Tuesday and Wednesday received by CNBC.
The company has steadily brought more of its employees back this week from the hiatus and vacation that began on March 15. On March 22, it initially resumed some work with a “small team”. Amid the wider hiatus, Virgin Orbit has been working to complete its investigation into the in-flight failure of its previous launch and finalize preparations for its next rocket.
Shareholders poured out of the stock in extended trading on Thursday, with shares selling off more than 40% following the announcement. Virgin Orbit stock closed the regular session at 34 cents a share after falling 82% year-to-date.
A Virgin Orbit representative did not immediately respond to CNBC’s request for comment.
Sir Richard Branson poses in front of Virgin Orbit’s rocket factory.
Virgo Orbit
Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket under the plane’s wing mid-flight. But the company’s latest mission suffered an in-flight failure, with a problem during launch causing the rocket to fail to reach orbit and crash into the ocean.
The company was among a select few US rocket companies to successfully reach orbit with a privately developed launch vehicle. Since 2020, six missions have been launched with four successes and two failures.
It has been seeking new funding for several months, with majority owner Sir Richard Branson unwilling to continue funding the company.
Virgin Orbit was spun off from Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest shareholder with a 75% stake. Mubadala, the Emirates’ sovereign wealth fund, holds the second largest stake in Virgin Orbit at 18%.
The company previously hired bankruptcy firms to create contingency plans in case it couldn’t find a buyer or investor. Branson is top priority over Virgin Orbit’s assets as the company has raised $60 million in debt from Virgin Group’s investment arm.
The same day Hart announced to employees that Virgin Orbit was ceasing operations, the board approved a “golden parachute” severance plan for top executives if they are terminated “following a change of control” of the company.