Virgin Orbit is laying off around 85% of its workforce in order to further reduce expenses, after the troubled space company said it was unable to secure additional funding to keep it afloat.
The news, which Virgin Orbit filed with the U.S. Securities and Exchange Commission on Thursday, comes just two weeks after the company furloughed all employees and entered an “operational pause” in order to find more cash. There were talks that Matthew Brown, a Texas-based venture capitalist, may come to the rescue, but those talks dissolved over the last weekend. Today’s filing confirms that Virgin was unable to find another lifeline.
According to audio of an employee all-hands on Thursday afternoon obtained by CNBC, Virgin CEO Dan Hart – reportedly choking up, again per CNBC – said, “We have no choice but to implement immediate, dramatic and extremely painful changes.”
He said the call would “probably the hardest all-hands that we’ve ever done in my life.”
The layoffs span all departments. But even the workforce reduction comes with a price tag for cash-strapped Virgin Orbit: the company will pay around $8.8 million in severance payments and employee benefits costs, plus a separate $6.5 million related to outplacement services and regulatory compliance.
To pay for these immediate expenses, Virgin got a $10.9 million injection from Virgin Group, the umbrella company that oversees billionaire Richard Branson’s various businesses.
Virgin Orbit is the brainchild of Branson, who is still the company’s majority owner. But evidently even Branson – who in recent months, through his conglomerate Virgin Group, threw upwards of $55 million into the sinking space company – is done funding the company.
Virgin Orbit can lay claim to four successful missions using its unique system, which uses a modified Boeing 747 to release a rocket mid-flight. The company’s most recent mission, from Cornwall, U.K., ended in failure due to an issue with the rocket’s second stage, posing a major blow to Virgin’s plans to continue launches this year.
Shares of Virgin Orbit have tanked to just $0.34, down from $1.32 at the beginning of the month.