Virgin Orbit cuts staff to wind down its operations

Satellite launch company running out of funding as it loses 85% of its workforce

A repurposed Virgin Atlantic Boeing 747 aircraft carrying Virgin Orbit's LauncherOne rocket at Cornwall Airport in Newquay, Britain. PA

Shares in Virgin Orbit fell by more than 40 per cent in after-hours trading in New York, following speculation that the satellite-launching company has run out of funding.

The business is set to cut 675 jobs, or close to 85 per cent of the workforce, with founder Richard Branson saying he will inject about £9 million to cover severance costs.

A Virgin Orbit representative said the remaining 15 per cent of employees would work on winding down the business.

The Financial Times earlier reported that Virgin Orbit's chief executive Dan Hart was scrambling to secure a last-minute funding deal that could stop the company from collapsing.

At one point in late trading on Thursday in New York, Virgin Orbit shares were priced at 19 cents. A year ago, they were changing hands for about $7 each.

A replica of Virgin Orbit's LauncherOne rocket sits at Newquay Airport in Britain. Reuters

Earlier this year, a Virgin Orbit rocket failed to complete the first satellite launch from UK soil.

California-based Virgin Orbit put all its operations on hold earlier this month as it sought extra funding.

In US regulatory filings, the company confirmed the job cuts “in order to reduce expenses in light of the company's inability to secure meaningful funding”.

Virgin Orbit said the layoffs would affect workers in the “all areas” of the company.

It expects total severance payments to staff and other related costs to be about $15 million (£12.1 million).

“Space looks increasingly like a frontier too far for investors, with Virgin Orbit crashing to earth as it fails to secure new funding, sees nearly the whole workforce laid off and ceases operating for the foreseeable future,” said Russ Mould, investment director at AJ Bell.

“In more bullish markets, the promise of developing a commercial satellite launch business might have been enough to excite but not in these more sober times.

“Attention may now turn to its more established space tourism sister business, Virgin Galactic, which has lost more than 60 per cent of its value over the last year.”

Virgin Orbit's LauncherOne rocket ignites moments after being released by an aircraft in January 2021. Photo: Virgin Orbit

Unlike rivals that launch rockets from the ground, Virgin Orbit uses a technique known as air launch, in which its LauncherOne rocket is released at a high altitude from underneath the wing of a modified Boeing 747 aircraft.

The company began developing the rocket at Virgin Galactic, years before the satellite-launch business was formally created.

Virgin Orbit successfully launched its first mission into orbit in January 2021 and later completed four successful flights.

The company had planned to increase the number of launches this year but had to reassess after a mission in January failed, following an in-flight problem with a fuel filter that led to the loss of the rocket and the nine small satellites it was carrying.

If it had been a success, the mission would have been the first orbital launch from British soil.