Virgin Orbit, a satellite launch company founded by Sir Richard Branson, has filed for Chapter 11 bankruptcy protection in the US after failing to secure new investment. The company had debts of $153.5m as of September last year, and it halted operations weeks ago, announcing that it would cut 85% of its workforce. However, despite the financial difficulties, Virgin Orbit’s CEO Dan Hart said that the company had a “wide appeal” to a new owner because of its team’s cutting-edge launch technology.
Virgin Orbit’s Background
Virgin Orbit was founded in 2017 as a spin-off from Sir Richard’s space tourism company, Virgin Galactic. The firm mostly owned by Virgin Group, launches rockets from beneath modified Boeing 747 planes to send satellites into space. Although the company failed in its attempt to send a satellite into orbit from the UK for the first time in January 2021, it has achieved several notable milestones since its inception. One such accomplishment was launching its first satellite, LauncherOne, into space in January 2021, marking a significant milestone in the company’s history.
In June 2021, Virgin Orbit launched its first commercial mission, sending seven small satellites into space for the US Department of Defense and the Netherlands’ Royal Netherlands Air Force. This successful mission marked the company’s transition from a startup to a commercial satellite launch provider. Virgin Orbit has also made significant strides in developing cutting-edge launch technology that sets it apart from its competitors. Its air-launched rockets allow for greater flexibility in launch locations and reduced costs, making satellite launches more accessible and affordable.
Virgin Orbit’s Bankruptcy
Virgin Orbit’s bankruptcy filing provides it with a chance to keep operating while providing protection against creditors who are owed money. The company hopes to find a buyer to provide clarity on the future of the company to its customers, vendors, and employees. The company has already announced that Virgin Investments, part of Virgin Group, would provide $31.6m in new money to help Virgin Orbit through the process of finding a buyer.
Virgin Orbit’s collapse has led some to question the potential of space exploration as an investment theme. However, there are opportunities for Virgin Orbit to re-emerge a few months later with new owners, no debts, and a healthy stash of investment cash to take the business forward. Although any prospective new owner will want to ensure that a high cadence of launches can be achieved, the original aim of the company, Virgin Orbit’s innovative air-launched rockets and commitment to advancing space technology have laid a foundation for future space exploration and development.
What The Bankruptcy Entails
Virgin Orbit’s bankruptcy filing is likely to have several impacts on the economy, both in the US and the UK.
Firstly, the bankruptcy will have a significant impact on the 750 employees who were recently laid off by the company. These workers will face job losses and uncertainty about their future employment prospects. This could lead to a rise in unemployment rates in the areas where the company operated, which could in turn lead to a decrease in consumer spending and a reduction in economic growth.
Secondly, the bankruptcy could have an impact on the broader space industry, as it could create uncertainty for investors and customers. Potential investors may be hesitant to invest in other space companies, fearing similar financial difficulties. Additionally, Virgin Orbit’s customers, including the US Department of Defense and the Royal Netherlands Air Force, may have to seek alternative launch providers, which could lead to delays in their satellite launches.
The bankruptcy could also impact the UK’s ambitions in the space industry. Virgin Orbit’s recent failed launch mission from the Spaceport Cornwall was seen as a crucial moment for the UK space exploration industry. The setback could delay the UK’s efforts to establish itself as a key player in the space industry and could lead to a loss of investor confidence in the UK space sector.
On the other hand, the bankruptcy could also create opportunities for other companies in the space industry. Virgin Orbit’s innovative air-launched rockets have demonstrated the potential for a new approach to satellite launches, and other companies may seek to capitalize on this technology. Additionally, the bankruptcy could lead to the acquisition of Virgin Orbit by another company, which could bring new investment and expertise into the industry.
Furthermore, the UK space industry is still growing, and there are opportunities for other companies to fill the void left by Virgin Orbit. The UK government has set a target of increasing the country’s share of the global space industry to 10% by 2030, and there are many companies working towards this goal.
In conclusion, Virgin Orbit’s bankruptcy will have a significant impact on the economy, particularly for the company’s employees, investors, and customers. However, there are also opportunities for the broader space industry to learn from Virgin Orbit’s innovative approach to satellite launches and for other companies to step in and fill the void left by the company’s collapse. The UK’s space industry is still growing, and there is potential for the country to become a key player in the global space industry, despite this setback.
