Virgin Orbit, the satellite launch company founded by Richard Branson, has filed for Chapter 11 bankruptcy in the US after a failed rocket launch from the UK in January and a lack of funding. The launch small launch industry is brutal, and RocketLab is the dominant player in that space.
Background
Virgin Orbit was spun off from Virgin Galactic in 2017 with a goal to provide low-cost and flexible access to orbit for small satellites using a modified Boeing 747 jet as a launch platform. The company had successfully launched 33 satellites into orbit as of December 2022, including for NASA, the US Air Force, and several commercial customers.
The Setback
Things took a turn for the worse in January 2023 when Virgin Orbit’s first attempt to launch satellites into orbit from the UK failed. The LauncherOne rocket, carried by the jet and released over the North Sea, suffered an engine malfunction shortly after ignition and fell into the ocean. The launch was supposed to showcase Virgin Orbit’s capabilities to the UK government, which had invested $9.5 million in building a spaceport in Cornwall for future launches.
The Fallout
Virgin Orbit faced delays and cost overruns due to the Covid-19 pandemic and technical issues, and the failed launch was a major setback. The company had gone public in November 2021 through a merger with a special purpose acquisition company (SPAC), valuing it at $3.2 billion. However, its stock price plummeted after the launch failure and never recovered. Virgin Orbit tried to secure more funding from existing and new investors, but was unable to raise enough capital to continue its operations.
Bankruptcy Filing
Virgin Orbit announced last week that it had laid off 85% of its staff and ceased operations for the “foreseeable future”. On Monday, the company filed for bankruptcy protection in Delaware, saying it had assets of around $243 million and debts of around $153 million as of September 30. The company said it had received interest from several potential buyers and hoped to complete a sale within 90 days. It also said it would receive a $31.6 million loan from Virgin Investments, one of its sister companies, to fund its operations during the bankruptcy process.
The Impact
Virgin Orbit’s bankruptcy is a blow to Branson’s ambitions in the space industry, which also include Virgin Galactic, his suborbital spaceflight company that plans to take paying customers to the edge of space. Virgin Galactic has also faced delays and setbacks, including a fatal crash in 2014 and a test flight failure in December 2020. The company recently received approval from the Federal Aviation Administration (FAA) to fly passengers and is expected to resume test flights soon.
Lessons Learned
Virgin Orbit’s bankruptcy highlights the challenges and risks of the emerging satellite launch market, which has attracted many new entrants in recent years. The market is driven by the demand for small satellites for applications such as broadband internet, Earth observation, and national security. However, the market is also highly competitive and uncertain, with many players vying for a limited number of customers and launch opportunities.
The future of Virgin Orbit will depend on whether it can find a buyer who is willing to invest in its technology and business model, and whether it can resume its launch operations and win new contracts. The company still has some assets and advantages, such as its unique air-launch system, its existing customer base, and its potential access to the UK market. However, it will also face significant challenges and uncertainties, such as its legal liabilities, its regulatory approvals, and its competitive position.