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What went wrong at Virgin Orbit? 4 red flags signaled trouble for Richard Branson’s satellite launch firm.

Richard Branson, next to Virgin Orbit's Cosmic GirlRichard Branson’s Virgin Orbit has filed for bankruptcy protection.

Virgin Orbit/Matthew Horwood/Getty Images

  • Richard Branson’s Virgin Orbit struggled to make a comeback after a failed launch in January.
  • It filed for bankruptcy protection after laying off staff and failing to secure enough funding.
  • Here’s what went wrong at the satellite launch firm.

A failed rocket launch, stalled investor talks, layoffs, and now a bankruptcy protection filing. It’s clear Virgin Orbit has faced a tumultuous few months.

The satellite launch company has gone from a $3.2 billion valuation after going public in 2021 to a market capitalization of $67.4 million on Tuesday.

Virgin Orbit ended up filing for Chapter 11 bankruptcy protection on Tuesday in the US after the company failed to secure funding to continue operations.

But what pushed Richard Branson’s satellite launch provider down the slippery slope?

Falling short in SPAC deal

The company touts itself as having a “flexible and responsive” launch system that has delivered national security, commercial, and international satellites into orbit. Branson said in 2019 that Virgin Orbit could replace satellites for the US Air Force in 24 hours.

But this wasn’t enough for Virgin Orbit to raise an anticipated $483 million in a 2021 SPAC deal. Instead, the merger raised $228 million in gross proceeds, a statement said. This was because of a high rate of shareholder redemptions, per CNBC.

Expensive launches with a low launch rate

Virgin Orbit Boeing 747Virgin Orbit’s Cosmic Girl releases a LauncherOne rocket test article in mid-air for the first time during a July 2019 test.

Greg Robinson/Virgin Orbit

Virgin Orbit was spun out of Branson’s space tourism company, Virgin Galactic, in 2017. They both sit under the Virgin Group.

Unlike SpaceX, Virgin Orbit blasts its LauncherOne rocket into space with the help of a modified Virgin Atlantic Boeing 747 called Cosmic Girl. The rocket, filled with small satellites, is strapped underneath the wing of the plane and is released when the aircraft reaches 35,000 feet in altitude. The spacecraft then roars into orbit and delivers the satellites.

Since its inception, Virgin Orbit has had four successful missions out of a total of six launches.

Each air launch with LauncherOne, which isn’t fully reusable, costs around $12 million, per media reports. The Boeing 747, however, is reusable.

Branson and the Virgin Group have supported Virgin Orbit, investing more than $1 billion in the company, including $60 million since November 2022, a company spokesperson told Insider. This funding “was not enough to counter the strong headwinds and liquidity challenges Virgin Orbit continues to face,” the spokesperson added.

Failed launch

A general view of Cosmic Girl, a repurposed Boeing 747 aircraft carrying the LauncherOne rocket under its left wing, as final preparations are made at Cornwall AirportCosmic Girl, a repurposed Boeing 747 aircraft, carrying the LauncherOne rocket under its left wing, as final preparations are made at Cornwall Airport Newquay.

Matthew Horwood/Getty Images

Virgin Orbit has launched the majority of its rockets from California, where it’s headquartered. The company carried out its first mission in May 2020, but the rocket failed on its way to space.

The second mission in January 2021 was Virgin Orbit’s first successful launch when the rocket sent 10 small satellites into orbit for NASA.

Following this, Virgin Orbit had three successful missions — one more in 2021 and two in 2022. This was despite CEO Dan Hart telling CNBC after the SPAC deal that the company was hoping to launch seven rockets in 2022.

With launch frequency down, anticipation was high for Virgin Orbit’s sixth mission in January 2023. It was due to be the UK’s first orbital space launch to take place from British soil. The Boeing successfully took off from Spaceport Cornwall in Newquay and dropped LauncherOne at a high altitude. But the rocket suffered an “anomaly” and failed to reach orbit to deliver the nine satellites onboard. 

Ultimately, Virgin Orbit has been unable to reach the rate of launches needed to meet the required revenue, per CNBC.

Funding issues 

Since the failed UK launch, Virgin Orbit has attempted to rake in funding from investors, per reports. Reuters reported Texas-based investor Matthew Brown was in talks to inject $200 million into Virgin Orbit, but the discussions collapsed.

Branson is the majority stakeholder of Virgin Orbit, owning 75% of shares, but CNBC reported that he didn’t want to fund the company further.

Amid the recent turmoil, Virgin Orbit announced last week it was laying off 85% of its workforce. The company was also ceasing operations “for the foreseeable future,” per CNBC.

It’s now on the brink of bankruptcy. In a copy of the company’s bankruptcy filing seen by Insider on Tuesday, Virgin Orbit listed assets of about $243 million and total debt of $153.5 million as of September 30, 2022. 

Chapter 11 bankruptcy protection would allow Virgin Orbit to keep operating while it tries to restructure its debts. 

Virgin Orbit did not immediately respond to Insider’s request for comment. 

Got a tip? Get in touch with this reporter via email kduffy@insider.com or Twitter DM for Signal.

Read the original article on Business Insider
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