Richard Branson's satellite launch company, Virgin Orbit Holdings Inc., has filed for bankruptcy due to a lack of capital in an increasingly cutthroat industry. On Tuesday, the firm declared that it was trying to sell itself since it could not improve its financial situation with new funding. After pouring over a billion dollars into the company, which had promising prospects in the burgeoning commercial-satellite launch market, Branson has suffered a major setback.
As demand for satellite launches increased and access to Russian options dried up following Moscow's invasion of Ukraine, Virgin Orbit was founded to fill the void. The company's innovative approach involves shooting satellites from under the wing of a Boeing 747 jumbo airplane. The firm promoted itself as an industry disruptor, with the ability to take off on short notice from any airstrip equipped to handle large aircraft. Nevertheless, this approach was at odds with that of Elon Musk's SpaceX, which deploys satellites via vertical launchers.
The failure of the launch from England in January marked the beginning of the end for Virgin Orbit. The failure occurred when finance was scarce and investors were wary of investing in new technology ventures, such as a satellite launcher. As a result of the Covid-19 epidemic shutdowns and travel restrictions, even Mr. Branson's privately held Virgin Group, which includes airlines and cruise cruises, suffered losses. Notwithstanding all of these setbacks, Mr. Branson's space endeavors were a shining light.
Only three months before it was set to make history by launching the first satellites from the United Kingdom, Virgin Orbit declared bankruptcy. The satellites it carried were destroyed after the high-profile launch. The company said last week that it will be laying off 675 workers, or approximately 85% of its overall personnel, in an effort to cut costs.
After filing for chapter 11 with the U.S. Bankruptcy Court for the District of Delaware, Virgin Orbit obtained $31.6 million in debtor-in-possession financing from Virgin Investments Ltd. The company said it would use the money to keep running while it looked for a buyer.
Companies that have followed Virgin Orbit's lead and gone public as SPACs have not been immune to bankruptcy. Similar to Virgin Orbit, grocery delivery service Boxed Inc. disclosed on a Sunday that it had filed for bankruptcy after completing a merger with a special-purpose acquisition firm in the same month and year.
In conclusion, the demise of Virgin Orbit is a major setback for Richard Branson's space endeavors. Yet, businesses should know that filing for bankruptcy is not the end of the road. It's possible that, with the correct strategy, Virgin Orbit can bounce back and keep putting satellites into orbit.