Aircraft engineering company Virgin Orbit which is owned by British entrepreneur and business magnate Richard Branson has recently revealed plans to lay off nearly all of its workforce making about 85 percent.
In a US regulatory filing, Virgin Orbit disclosed that it made the decision in order to reduce expenses in light of the company’s inability to secure meaningful funding.
Virgin Orbit CEO Dan Hart, disclosed that the company has ceased operations for the foreseeable future which is coming weeks after the company halted its operations in an attempt to bolster its finances.
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In his words,
“Unfortunately, we have not been able to secure the funding to provide a clear path for this company. We have no choice but to implement immediate, dramatic, and extremely painful changes. This would be probably the hardest all-hands that we have ever done in my life”.
Hart further disclosed that the layoff will affect every department in the company, adding that laid-off employees will be provided with a severance package which entails a cash payment, an extension of benefits, and support in finding a new position with a direct pipeline set up with sister company Virgin Galactic for hiring.
Virgin Orbit estimated that the move will incur aggregate charges of approximately $15 million, consisting primarily of $8.8 million in severance payments and employee benefits costs and $6.5 million in other costs primarily related to outplacement services and WARN Act exposure.
Following the news of its proposed layoff which has visibly not gone down well with investors, Virgin Orbit which is a publicly traded company has seen its shares decline to more than 44%. Last year, the company’s shares were valued at $7.59, but following the recent close of the market, its shares were just worth $0.34.
Founded in 2017, with its Headquarters in Long Beach, California, Virgin Orbit had more than 300 employees led by CEO Dan Hart, a former vice president of government satellite systems at Boeing. The company from which it was spun off, Virgin Galactic, continued to focus on two other capabilities which include human suborbital spaceflight operations and advanced aerospace design, manufacturing, and testing.
Virgin Orbit is a company within the Virgin Group that provided launch services for small satellites. The company was formed as a spin-off of Richard Branson’s Virgin Galactic space tourism venture to develop and market the LauncherOne rocket, which had previously been a project under Virgin Galactic.
It would be recalled that in 2020, during the peak of the pandemic, Virgin Orbit announced it partnership with the University of California Irvine and the University of Texas at Austin in a new venture to build simplified mechanical ventilators, specifically bridge ventilators for partially recovered patients and patients not in intensive care, as it sought to address the global shortage of ventilators.
On December 30, 2021, Virgin Orbit underwent a SPAC merger with NextGen Acquisition Corp and became a publicly traded company (symbol VORB) on the NASDAQ stock exchange.