In the wake of their failure to achieve orbit in the mission launched from the UK in January, BBC News reported yesterday that Virgin Orbit has announced a pause in all operations and that it will furlough almost all of their staff.
In a statement, the company merely said, "Virgin Orbit is initiating a company-wide operational pause, effective March 16, 2023, and anticipates providing an update on go-forward operations in the coming weeks." Shares dropped 18.8 percent to 82 cents (72p) in extended trading in response to the news.
It's no secret that they've been in a financial squeeze for a while; that was
reported on before the January mission. From the
January 2nd post, about three weeks before the second stage malfunction that cost the launch
vehicle from the UK and its mission.
This has led to concern about Virgin Orbit's financial viability, which was then reinforced by the company itself. Virgin Orbit announced on the evening before Thanksgiving the "cessation" of a securities offering, saying, "Due to current market conditions, the company has elected not to proceed with an offering. Any future capital-raising transactions will depend upon future market conditions." In the short term, they have enough capital to keep going, but they need to dramatically increase their launch cadence to reach profitability.
Everyone knows that Virgin Orbit is Sir Richard Branson's child; it couldn't have existed without him starting it and providing funding to keep it operational.
Independent estimates suggest that Virgin Orbit spent as much as $1 billion to develop and test its LauncherOne rocket and air-launch system. The company made its first successful launch in January 2021 and has averaged one mission every six months since then. Virgin Orbit went public in 2021, but it raised just $68 million and had to turn to private investments for an additional $160 million to keep operating.
Most recently, Branson has been propping up the company's finances. He invested $25 million in November 2022 and another $20 million in December 2022. Importantly, this was a secured note, giving Branson priority as a creditor for the company's assets, including "all aircrafts, aircraft engines (including spare aircraft parts), and related assets."
It appears that Virgin Orbit is also being affected by the worldwide, slow
motion, economic slowdown, particularly the cost of money (interest
rates). In February, the company announced it had borrowed an additional
$10 million from Virgin Investments Limited, owned by Branson. In the
launch business, $10 million isn't a lot of money, and especially not for a
business with the payroll and expenses of Virgin. That's a couple of
weeks of funding, and here we are around four weeks later.
Moreover, the note has an interest rate of 12 percent, which is double the rate of the November and December notes, which had interest rates of 6 percent. And finally, the new filing contains a separate security agreement that explicitly turns the unsecured November Branson note into a secured obligation.
Sir Richard Branson in mission control for January's launch. Virgin Orbit photo.
What's the long term outlook? Is there a long term outlook? I'm not optimistic about that, but all we can do is wait and see.
The Angry Astronaut is not holding out much hope, either. Branson COULD, if he wished, put more money in the venture, but so far has not. I wonder why??ReplyDelete
Because Branson is bleeding money right and left due to his investments. Virgin (outside air space) had one last chance and they blew it.Delete
Imagine SpaceX if the last Falcon 1 launch had resulted in failure. Sure, Musk had the on-the-books money to continue to fund it, but he was bleeding money with Tesla and his other ventures and only making a successful launch kept him able to support SpaceX.
I think we need to add to the "Space is hard" and just say "Space is hard and EXPENSIVE."
'Hard and EXPENSIVE" says it all...Delete
Ah, one more company full of hopes and dreams disappears.ReplyDelete
Virgin Galactic, you had a chance. Several chances. And you have continued the Curse of Burt Rutan, that would be, makes great experimental models, never commercially successful projects.
I guess this means Spaceship 2 et al will never fly again.
VG now joins Bigelow Aerospace as a 'what-if.'
When a hobby and a business model doesn't interact well.ReplyDelete
The Banking situation right now doesn't bode well for exploring right now. It's keeping the business home fires burning season.