Mar 15, 2023
Virgin Orbit Furloughs Staff, Halts Operations While It Seeks Funding
(Bloomberg) -- Virgin Orbit Holdings Inc. shares tumbled after the Richard Branson-founded satellite launch firm said it would halt operations while attempting to secure more funding.
The company wants to conserve capital while it “conducts discussions with potential funding sources and explores strategic opportunities,” according to a regulatory filing Thursday. The operational pause is expected to continue through March 21.
Virgin Orbit, a sibling company of space tourism venture Virgin Galactic Holdings Inc., announced the plan at an all-hands meeting with employees on Wednesday, according to a person familiar with the matter. Nearly all Virgin Orbit staff were furloughed for the week, said the person, who asked not to be identified discussing non-public information.
See also: Virgin Orbit Rating Under Review at Canaccord Amid Funding Issue
A spokesperson for Virgin Orbit said the company “anticipates providing an update on go-forward operations in the coming weeks.”
The shares plunged 35% to 66 cents at 9:39 a.m. in New York, the biggest intraday decline since they began trading in late 2021. That gave the company a market value of about $222 million.
The operational upheaval shows the extent of the issue for Virgin Orbit, which had been running low on cash. It reported an operating loss of $149 million for the first nine months of 2022 during its previous earnings announcement. It had also been raising periodic funding from Virgin Investments Ltd. The company is set to report earnings for the fourth quarter of 2022 on March 29.
Virgin Orbit is also recovering from a high-profile launch failure that occurred in January. It had been set to launch nine small satellites out of Spaceport Cornwall in what was supposed to be the first orbital rocket launch from British soil. The rocket, however, suffered a mishap during flight and never reached orbit, leading to the loss of all satellites on board.
Virgin Orbit has since blamed the accident on a fuel filter that became dislodged during the launch.
“On the ops side our investigation is nearly complete and our next production rocket with the needed modification incorporated is in final stages of integration and test,” the spokesperson said in the statement.
(Updates with share decline in fifth paragraph.)
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