Virgin Orbit suspends operations, furloughs entire workforce as financial woes bite

Virgin Orbit, the satellite launch company owned by billionaire Richard Branson, has announced it will pause all operations and furlough nearly all of its employees as it finalizes a new investment plan to pull itself out of financial difficulties.

The move comes after the company's mission in January to deploy nine small satellites into lower Earth orbit failed, dealing a significant blow to Virgin Orbit's business.

According to a source familiar with the matter, Virgin Orbit CEO Dan Hart told staff in a meeting that the furlough was intended to give the company time to finalize its investment plan.

The duration of the furlough was unclear, but Hart said he would provide employees with an update by the middle of next week on when they could return. The company did not provide details on the furloughs in its statement to Reuters.

Virgin Orbit's shares dropped over 18 per cent to 82 cents in extended trading following the announcement.

However, the company said its investigation into the January mission failure was nearly complete and that its next production rocket with necessary modifications was in the final stages of integration and testing.

Watch:Virgin Orbit company ceases operations, seeks additional funding

Solid Funding

Notwithstanding the setback, Virgin Orbit has attracted substantial finance from several sources, including a $280 million funding round in July 2020. The US Department of Defence and the UK Royal Air Force are just two of the organisations with which the corporation holds contracts.

The decision by Virgin Orbit to halt operations and lay off staff highlights the difficulties facing the commercial space industry, which has witnessed an increase in investment in recent years but is still extremely risky and competitive.

Many space firms have had trouble turning a profit, and the COVID-19 pandemic has made things even worse for them. For Virgin Orbit to succeed in its quest to become a strong competitor in the satellite launch business, the company's upcoming mission must be a success.

In the upcoming years, the sector is anticipated to expand significantly due to rising demand for satellite-based services such as internet connectivity, remote sensing, and navigation. In the interim, Virgin Orbit will have to negotiate a challenging financial environment as it looks to get fresh funding and reestablish itself in the industry.

The company likely has a long and rocky road ahead of it after the furloughs announced this week.

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