“We have no choice but to implement immediate, dramatic and extremely painful changes,” CEO Dan Hart told employees, according to CNBC.
Virgin Orbit was founded by Branson in 2017 as a sister company to his larger space company, Virgin Galactic, with the goal of building flexible space launch systems. The company’s LauncherOne rockets are designed to be launched into the air from a modified Boeing 747-400 carrier.
While Virgin Galactic plans to build a business around carrying wealthy tourists into space, Virgin Orbit is rooted in the satellite business, pitching its rockets as a way to deliver small satellites into orbit.
The first attempt at an orbital launch from Britain ended in failure in early January. The company’s rocket experienced an “anomaly” that led to a premature shutdown and inability to reach orbit, according to a statement from the company.
An investigation concluded that the initial phases of the launch had gone according to plan, which the company said was the first of its kind for a launch from Western Europe. But a faulty fuel pump filter later caused the engine to overheat and prematurely end propulsion. It fell back to Earth and landed in the Atlantic Ocean.
The company also struggled financially. When it went public in 2021, it was valued at $3.7 billion, but it has been losing money since then and has had trouble funding its operations. In the third quarter of 2022, the most recent quarter for which detailed financial information is available, the company reported a net loss of $43.6 million on revenue of $30.9 million.
The news comes after Virgin Orbit had already put in place a company-wide “operational pause” on March 16 to save money while executives spoke with financiers and explored other options.
The layoffs will cost the company about $15 million, consisting of $8.8 million in severance and other employee benefits, plus about $6.5 million in costs related to finding outplacement services and other requirements of the WARN Act, a U.S. law that covers mass redundancies. It will cover severance costs through the sale of a convertible note to one of Branson’s other companies, according to an SEC filing.
The company’s stock fell 39 percent on Friday morning to open trading at a share value of about 20 cents.