Last night, CNBC broke the bombshell news that Virgin Orbit was pausing operations for at least a week while it looked for funding to support the business. As part of that pause, company executives reportedly told staff in an all-hands meeting that they were being furloughed — and that it would be unpaid.
The news isn’t exactly a surprise. Virgin Orbit’s financial woes have been discussed and dissected by the media for months — including here at TechCrunch — with many wondering how the company could sustainably continue operations.
The first misstep came during the company’s entrance on the public markets via a merger with a special purpose acquisition company (SPAC). That transaction, which Virgin Orbit said would yield as much as $383 million in SPAC proceeds, turned out to yield just $68 million from the SPAC (and $228 million overall).
Since then, the company’s continued to rapidly burn through cash. In the most recent quarterly financial report, filed at the end of the third quarter of last year, Virgin Orbit reported having around $71 million on hand and a net loss of $139.5 million for the nine months through September 2022. The beleaguered company’s fourth-quarter 2022 results will provide even more clarity on its fragile financial situation, though Virgin Orbit has not set a date for when those will be released.
In recent months, Richard Branson’s Virgin Group has thrown the rocket company a series of lifelines, including $25 million in November of last year and another $20 million the following month. The small launch company received another $10 million, also from Virgin Group, in January. Notably, the $20 million investment was a secured note, meaning that Branson’s Virgin Group has first priority for nearly all of the company’s assets, including its aircrafts.
The company hit yet another major stumbling block at the beginning of this year when its much-anticipated launch from Cornwall, U.K., failed due to an issue with a fuel filter in the rocket’s second stage. The failure, which came after a string of successful missions, resulted in a total loss of payload.
That the news isn’t a surprise is exactly the problem. It should’ve never come to a staff furlough. A company’s workforce should never have to bear the brunt of the C-suite’s capital mismanagement. That it happened in this case reveals, at the very least, a serious failure of leadership.
Since the news broke, dozens of Virgin Orbit employees have taken to LinkedIn to let others know that they’re open to work. Fortunately, there is a huge demand for talent in the space industry right now. Should Virgin Orbit shutter operations indefinitely, the hope is that all of Virgin’s workforce — technical and otherwise — find other positions quickly.
Comment