Richard Branson’s Virgin Orbit, with a rocket under the wing of a modified Boeing 747, lifts off to perform a major landing test of the High Altitude Launch Satellite System from Mojave, Calif., July 10, 2019.
Mike Blake | Reuters
Virgin Orbit It is furloughing nearly all of its employees and pausing operations for a week as it searches for a financing lifeline, people familiar with the matter told CNBC.
Virgin Orbit shares were down about 33 percent in after-hours trading from Wednesday’s close of $1.01 a share. The stock has fallen steadily from its inception at nearly $10 a share in December 2021.
Company executives briefed employees on the situation at a plenary meeting at 5 p.m. ET on Wednesday, according to people who were at the meeting. The leave is unpaid, though employees can cash in at the PTO, with only a small team still working. Virgin Orbit is also moving payroll up for a week through Friday.
In Hands, company leaders have told employees they aim to provide an update on furlough and funding status by next Wednesday or Thursday, according to the people, who asked not to be identified to discuss internal matters.
A Virgin Orbit spokesperson confirmed, in a statement to CNBC, that the company has begun an “operational hiatus.” The spokesperson added that Virgin Orbit plans to provide an “update on ongoing operations in the coming weeks”.
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The rocket builder has developed a system that uses a modified 747 to send satellites into space by dropping a rocket from under the plane’s wing mid-flight. But the company’s latest mission suffered a mid-flight failure, with a problem during launch causing the rocket to fail to reach orbit and crash into the ocean.
“Our investigation is nearing completion and our next production rocket, with the necessary modifications included, is in the final stages of integration and testing,” a Virgin Orbit spokesperson said.
When Virgin Orbit reported its third-quarter results in early November, it revealed $71.2 million in cash in the box as of the end of the quarter. Facing revenue of $30.9 million, Virgin Orbit reported an adjusted EBITDA loss of $42.9 million for the period as it continues to burn cash.
Since the fourth quarter, the company has been bringing in cash in debt via an investment arm of Richard Branson’s Virgin Group. The company raised $25 million in unsecured convertible notes in November, before raising $20 million and $10 million in 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 company has not yet announced when it will announce results for the fourth quarter of 2022.
Earlier this week, Virgin Orbit CEO Dan Hart canceled at the last minute his scheduled appearance on a panel during a space industry conference in Washington, D.C. scheduled for Tuesday.