Richard Branson’s Virgin Orbit, with a rocket under the wing of a modified Boeing 747 jetliner, takes off for a key drop test of its high-altitude launch system for satellites from Mojave, California, July 10, 2019.
Mike Blake | Reuters
Virgin Orbit is furloughing nearly all its employees and pausing operations for per week because it looks for a funding lifeline, people acquainted with the matter told CNBC.
Shares of Virgin Orbit fell about 33% in after-hours trading from its Wednesday close of $1.01 a share. The stock has slid steadily from its debut of near $10 a share in December 2021.
Company executives briefed staff on the situation in an all-hands meeting at 5 p.m. ET on Wednesday, in response to individuals who were within the meeting. The furlough is unpaid, though employees can money in PTO, with only a small team continuing to work. Virgin Orbit can also be moving up payroll by per week to Friday.
Within the all-hands, company leaders told employees that they aimed to supply an update on the furlough and funding situation by next Wednesday or Thursday, in response to the people, who asked to stay anonymous to debate internal matters.
A Virgin Orbit spokesperson, in an announcement to CNBC, confirmed that the corporate is starting an “operational pause.” Virgin Orbit plans to provide “an update on go-forward operations in the approaching weeks,” the spokesperson added.
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The rocket-building company developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. But the corporate’s last mission suffered a mid-flight failure, with a difficulty in the course of the launch causing the rocket to not reach orbit and crash into the ocean.
“Our investigation is almost complete and our next production rocket with the needed modification incorporated is in final stages of integration and test,” Virgin Orbit’s spokesperson said.
When Virgin Orbit reported third-quarter leads to early November, it disclosed money available of $71.2 million as of the tip of the quarter. Within the face of $30.9 million in revenue, Virgin Orbit reported an adjusted EBITDA lack of $42.9 million for the period because it continued to burn money.
For the reason that fourth quarter, the corporate has steadily brought in funds in the shape of debt via an investment arm of Richard Branson’s Virgin Group. The corporate raised $25 million in an unsecured convertible note in November, before raising $20 million and $10 million in senior secured convertible notes in December and February, respectively. The notes give Branson’s parent company “first-priority” to Virgin Orbit’s assets.
As of Wednesday, the corporate had yet to announce when it might report fourth-quarter 2022 results.
Earlier this week, Virgin Orbit CEO Dan Hart last-moment canceled a scheduled appearance on a panel during an area industry conference in Washington, D.C. set for Tuesday.
