Virgin Orbit comes to a standstill
Virgin Orbit is putting its operations and staff on hiatus as it seeks to find some money from somewhere.
The space launch company has had a rough time of it of late, having scaled back its proposed missions for last year, and essentially failed in its first UK orbital launch in January. Now it appears to be facing an investment crisis and is trying to buy some time to solve it.
On Wednesday company employees were told they would be furloughed without pay with Virgin Orbit ceasing operations for a week, starting the following day, according to CNBC, which broke the story thanks to unnamed sources who were at the all-staff meeting.
The company has since confirmed the news in an SEC filing.
“On March 15, 2023, Virgin Orbit Holdings…announced a Company-wide operational pause beginning on March 16, 2023, in order to conserve capital while the Company conducts discussions with potential funding sources and explores strategic opportunities,” the firm said. “There can be no assurance that these discussions will result in any transaction.”
Virgin Orbit said it will not provide further details until its board of directors approves a specific course of action.
However, it said it expects the hiatus to continue up to and including next Tuesday.
The company’s finances are clearly an issue. Its third quarter numbers showed an adjusted EBITDA loss of US$42.9 million on revenues of $30.9 million.
As of the end of Q3 the firm said it had $71 million in cash. It was keen to demonstrate that it had strong support from existing investors – it detailed an additional $25 million investment from major shareholder Virgin Group in early November – and said it was executing on its backlog to drive cash inflows; focusing on cost and operational efficiency to improve cash flow; and capturing new orders to drive working capital and cash receipts.
As you would expect, its tone was optimistic. However, come January and things started to look bleaker when its much-hyped Spaceport Cornwall launch failed. Or as the company itself put it, “Virgin Orbit’s LauncherOne experienced an anomaly, leading to a premature shutdown of the rocket and failure to reach orbit.”
The company promised a thorough investigation and said it was modifying its next rocket with a more robust filter, as well as looking more broadly to make sure it has addressed all possibly contributors to mission failure. It also said it would “proceed cautiously” towards its next rocket launch, which is scheduled to take place from the Mojave Air and Space Port in California for a commercial customer, although it has yet to provide further details.
It can hardly be a surprise that the firm’s share price has suffered. Virgin Orbit was trading at 68 cents at the time of writing on Thursday, down from $1.17 earlier in the week and way below its $10.47 high in July 2021.
At present it doesn’t look like a wholly tempting prospect for an investor, but we’ll see what the company has to say when it updates staff and the market next week.
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