Since last Thursday, the employees of Virgin Orbit are sent home, awaiting their fate. The company, which became famous for its method of rocket release orbitals with a modified Boeing 747, has run out of money. An important signal that many players in the “NewSpace” sector will watch closely.
Reaching orbit isn’t everything…
virgin wallet
It was a rumor that had been going around for several months: Virgin Orbit has a big problem with funds. The math is relatively simple, in a year like 2022 the Long Beach-based company spent nearly $200 million, with less than $30 million in revenue. Enough to drain the accounts quickly, especially since the IPO in 2021 did not bring the hoped-for windfall (228 million instead of the expected 483) to hope to hold out for several years and significantly increase launches, and therefore income. silver. In this month of March 2023, the situation has become untenable.
Since last Thursday, the 750 employees of Virgin Orbit have been sent home, on technical unemployment: the company is no longer able to pay them. And as often in these situations, the stoppage is important. Either a major investment will take place (with or without a takeover), or the leaders will announce bankruptcy. CNBC reports that many of the employees surveyed have already started job searches. The management would refuse offers below 200 million dollars, its official value on the stock market (but which is falling).
cosmic debt
Virgin Orbit’s medium-term situation would have been complex even without these fund issues. Indeed, in this month of January, the firm suffered from a failure in flight of its LauncherOne rocket, dropped from the company’s modified 747… While it had for the very first time taken off from England. A problem with a filter in the fuel delivery lines on the second stage. “Space is hard”, the formula is constantly renewed, but it does not say everything: to hope to succeed and exceed the status of a promising startup, it is necessary not only to reach orbit, but to do so very regularly, at low cost and with a method that gives confidence to investors. With a maximum of 2 launches in 2021 and 2 in 2022, the expected cadence and promises of “fast flight on demand” could not be delivered for Virgin Orbit. Especially since at around 12 million dollars each, the LauncherOne rocket is not the cheapest on the market.
Take-off (of investors)
Many other American NewSpace players are watching Virgin Orbit’s situation carefully (takeover or bankruptcy), because theirs is not necessarily better. This is the case of Astra, for example, which last year abandoned work with its Rocket 3 rocket, the latter not being reliable enough. Part of the staff has already been fired until the preparatory work for Rocket 4 is completed… Overall, no public or private player in this small launcher sector (Rocket Lab, Firefly, Relativity Space, ABL Space, Virgin Orbit, Astra and others) has not yet been able to achieve the long-awaited profitability. Rocket Lab is almost there, largely thanks to its investments and takeovers of innovative companies for satellite components and solar panels… And this despite 9 launches last year!
Low prices, competition between players and the success of SpaceX’s low-cost bundled flights are hurting the wallet. Several players are waiting for mergers, takeovers and bankruptcies in the sector, especially in the United States.
Source : cnbc
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