After failing to find a funding reprieve, Virgin Orbit will cease operations “for the foreseeable future,” CEO Dan Hart announced during an all-hands meeting on Thursday. Nearly all of the company’s employees will be let go.

“Unfortunately, we’ve not been able to secure the funding to provide a clear path for this company,” Hart said, according to audio of the meeting obtained by CNBC.

“We have no choice but to implement immediate, dramatic and extremely painful changes,” Hart said, audibly choking up on the call. He added this would be “probably the hardest all-hands that we’ve ever done in my life.”

According to Hart, the corporation will cut all but 100 roles, or nearly 90% of the staff, stating that every team and department will be affected. The company stated in a securities filing that 675 positions, or around 85%, were eliminated.

“This company, this team — all of you — mean a hell of a lot to me. And I have not, and will not, stop supporting you, whether you’re here on the journey or if you’re elsewhere,” Hart said.

With a cash payment, an extension of benefits, and assistance in finding a new job, Virgin Orbit would “offer a severance package for every departing” employee, according to Hart. A “direct channel” has been established with sister business Virgin Galactic for hiring.

Since Monday, when Virgin Orbit abruptly postponed a planned all-hands meeting, Hart has been providing the company’s staff with quick daily updates. Hart informed colleagues on Monday that “extremely lively” investment discussions were still going on despite the fact that late-stage transaction negotiations with two investors had failed over the weekend.

According to copies of Hart’s emails from Tuesday and Wednesday that were obtained by CNBC, those investor negotiations continued this week. Hart had earlier stated that management will publish any changes “as swiftly and transparently as we can,” stressing that email leaks “are against company policy.”

More staff have been gradually returning to work this week as a result of the company’s operational standstill and furlough, which it started on March 15. A week later, it first started working again with a “small team.” In the midst of the general standstill, Virgin Orbit has been working to complete both the preparations for its upcoming rocket and its study into the mid-flight failure of its last launch.

After the disclosure, shareholders sold off the company in extended trading on Thursday, with shares falling more than 40%. At the end of the regular trading session, Virgin Orbit stock had dropped 82% to settle at 34 cents per share.

There were no comments available from Virgin Orbit.  

Virgin Orbit created a system that launches rockets from under the wing of a modified 747 jet in midflight to launch satellites into orbit. The company’s most recent mission, however, was aborted midflight due to a launch-related problem, which prevented the rocket from reaching orbit and ultimately caused it to fall into the sea.

The business was one of just a handful of American rocket businesses to use a privately constructed launch vehicle to successfully enter orbit. Since 2020, it has launched six missions, with four being successful and two being unsuccessful.

As majority owner Sir Richard Branson has refused to continue funding the business, it has been searching for new funding for a number of months.

Branson owns 75% of Virgin Orbit, which was created in 2017 as a spinoff of the billionaire’s Virgin Galactic company. The second-largest interest is held by Mubadala, the Emirati sovereign wealth fund, with 18% of the total.

In the past, the corporation employed bankruptcy law firms to create backup plans in case it couldn’t find a buyer or investor. The fact that Virgin Orbit borrowed $60 million from Virgin Group’s investment arm means that Branson has first preference on all of the company’s assets.

The board of directors of Virgin Orbit approved a “golden parachute” severance plan for top executives on the same day that Hart informed staff that the company was stopping operations. This was done in case these executives were fired “after a change in ownership” of the business.

(Adapted from CNBC.com)

Categories: Economy & Finance, Entrepreneurship, HR & Organization, Strategy, Sustainability