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Virgin Orbit, a rocket business owned by British billionaire Sir Richard Branson, has announced it will lay off 85% of its employees after failing to get additional funding. Media sources state that the company will also stop operating for the foreseeable future.
It happens a few weeks after the business temporarily halted operations in an apparent effort to strengthen its finances. Earlier this year, the first satellite launch from UK soil was aborted by a Virgin Orbit rocket.
Thursday after-hours trading in New York saw a more than 44% decline in the price of the company’s shares. Virgin Orbit stated that it made the choice “in order to decrease expenses in light of the company’s inability to acquire meaningful funding” in a file with US regulatory authorities.
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About 675 employees who “are located in all sections of the organization” would be impacted by the job cuts. According to the statement, Virgin Investments, a division of Sir Richard’s investment company, has invested $10.9 million (£8.8 million) in Virgin Orbit “to pay severance and other costs linked to the personnel reduction.”
Severance payments and other expenses are anticipated to total about $15 million, according to Virgin Orbit. It comes amid media allegations that the boss of the business informed personnel that operations would be halted until further notice.
According to CNBC, which broke the story first, Virgin Orbit chief executive Dan Hart remarked at a meeting with staff members, “We have no choice except to implement immediate, drastic, and highly painful changes.”
A BBC request for comment was not immediately answered by Virgin Orbit.
The company, which was established in 2017, has not produced a profit since going public. It is a part of Sir Richard’s corporate empire, which also includes the airline Virgin Atlantic and the space tourism company Virgin Galactic, and it produces rockets to launch tiny satellites.
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Virgin Orbit’s effort to launch the first satellite mission from UK land in January was unsuccessful. The company’s LauncherOne rocket, which took off from the Cosmic Girl Boeing 747, made it to space but was unable to enter the desired orbit.
It was hailed as a turning point in UK space development. It was thought that it would represent a significant advancement in realizing a goal to make the nation a worldwide player, from producing satellites to developing new spaceports.
Virgin Orbit announced earlier this month that it was “initiating an operational halt for the entire organization” and “anticipates providing an update on go-forward activities in the coming weeks.”