Branson’s Virgin Orbit Pauses Operations And Furloughs Nearly Entire Staff

Topline

Billionaire Richard Branson’s struggling aerospace company Virgin Orbit announced Thursday it will pause operations and reportedly furlough nearly its entire staff, in its latest effort to shore up cash as it searches for funding following a failed mission in January.

Virgin Orbit announced Thursday it will pause operations temporarily and reportedly furlough its … [+] staff as officials search for funding.

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Key Facts

Virgin Orbit announced the company-wide “operational pause” in a Securities and Exchange Commission filing, saying the pause will take effect Friday and last for nearly a week while the company “conducts discussions with potential funding sources and explores strategic opportunities.”

Sources familiar with the matter told Reuters the move would include a furlough of “almost all” of Virgin Orbit’s 660 employees, according to PitchBook (Virgin Orbit did not immediately respond to Forbes’ inquiry for further details).

CEO Dan Hart told staff in a message obtained by Reuters the furloughs are intended to buy time for company officials to orchestrate an investment plan.

The furlough comes as the company investigates a failed mission in January to deploy nine satellites into orbit, and after it reported a $43 million third-quarter loss in November—though the company has since raised roughly $55 million through the sale of convertible notes to Branson’s Virgin Investments, including the most recent sale of $10 million in January, as a stopgap measure.

Shares of Virgin Orbit tumbled more than 32% Thursday, to a record low of 68 cents (shares have fallen more than 62% so far this year).

Key Background

Branson founded Virgin Orbit in 2017 as a satellite launch company, and it completed its first successful commercial launch in early 2021. The company works in partnership with Virgin Galactic, the aerospace tourism company that flies paying customers to the edge of space, including Branson and three employees, who took a ship into orbit in July 2021. Branson took Virgin Orbit public on the Nasdaq one month after his Virgin Galactic flight.

Forbes Valuation

We estimate Branson’s net worth at $3 billion, making him the 932nd richest person in the world. Branson, 72, built his fortune through a record business he started 50 years ago called Virgin Records, which he sold for $1 billion in 1992. He also owns the line of “Virgin” companies, including space tourism company Virgin Galactic and airline Virgin Atlantic, which filed for bankruptcy protection in August 2020 and laid off 3,550 employees.

Tangent

Virgin Orbit’s furloughs come amid a series of massive layoffs at large tech companies and manufacturers, including SiriusXM, Tyson Foods, Citigroup and Waymo this month alone (Forbes has been tracking the biggest U.S. layoffs this year). Layoffs ramped up last summer, as inflation reached a 40-year high, the housing market cooled substantially and economists warned recession could be around the corner. The latest large round of cuts was at Meta, the parent company of Facebook and Instagram, which slashed 10,000 positions Tuesday in its second round of layoffs in four months—bringing the total number of employees laid off at the social media giant to 21,000.

News Peg

Analysts at Goldman Sachs raised their recession indicator Thursday following the collapse of three regional banks that rocked the stock market and ignited economists’ fears of system-wide contagion—guessing there’s a 35% chance of a U.S. recession over the next 12 months, up from their previous estimate of 25%.