Virgin Orbit is pressing ahead toward another launch attempt in the months ahead as it courts suitors to rescue it from bankruptcy after it was forced to lay off 85 percent of its staff, Dan Hart, the company’s CEO said in an interview Wednesday.
While he defended the company’s “unprecedented performance” in developing a rocket that is “air launched” by dropping from the wing of a flying 747 airplane and then firing its engines, he said in his first interview since the company filed for Chapter 11 that some key financial and operational missteps led the company to burn through hundreds of millions of dollars while producing just a handful of successful launches.
“At the end of the day, as a CEO, those are my choices, and I think about this a lot. I could have made different choices along the way,” he said. “I mean, innovation is a messy business, and you make choices and you walk out in the parking lot each day. And you wonder, did I move the ball forward? Or do we go backward today?”
He said the company, which now has just 100 employees, has been in “a lot of discussions” with potential buyers. Asked if he was confident one would step up and rescue the company, he said: “We’ll see how that works out. But that’s my objective.”
Caleb Henry, director of research at Quilty Space, a research and advisory firm, said “there is a real chance that someone will buy them—if the price is right.”
He noted that Virgin Orbit had raised more than $1 billion and that suitors might be looking to “obtain assets at a sale price.” The Pentagon’s interest in the company for hypersonics testing and missile defense could be attractive as well, he said.
Founded by Richard Branson, Virgin Orbit started out as a darling of the growing commercial space industry. Spun off from Virgin Galactic, Branson’s space tourism venture, it had the backing of a billionaire Space Baron and a novel approach. Instead of launching its rockets vertically from the ground, they would fly from a commercial airplane, allowing the company to shoot off rockets virtually anywhere with a big enough runway.
The Pentagon showed a keen interest in the company and the promise that it would be able to launch small satellites quickly, and from nearly anywhere, giving the military the sort of rapid responsiveness it had long sought.
When it first achieved orbit in 2021, Branson crowed that “this magnificent flight is the culmination of many years of hard work and will also unleash a whole new generation of innovators on the path to orbit.”
Instead, Virgin Orbit quickly became a symbol of the woes plaguing many small launch companies. It went public through a special acquisition company, as SPACs, as they are known were falling out of favor with investors. Virgin Orbit fell well short of raising the anticipated $382 million.
Despite that setback and the drying up of investment capital, it continued to grow and spend rapidly, hiring many dozens of employees in an attempt to move fast and ramp up its launch rate. In the third quarter of 2022, the most recent quarter for which detailed financials are available, Virgin Orbit reported a net loss of $43.6 million on revenue of $30.9 million.
“The big problems were overspending on personnel, the lack of an anchor customer, expensive delays in their vehicle and an underwhelming diversification strategy in terms of revenue,” he said.
Faced with technical challenges, the company continued to fly infrequently. And then in January, its rocket suffered a failure during a launch attempt from the United Kingdom, sending the company in a downward spiral.
One of the mistakes, Hart said, was waiting until after a successful launch to go public.
“We did find ourselves in a position where we needed to expand our investment investor participation, and the SPAC was an instrument that was available to us,” he said. “I’d say our timing for this SPAC was less than ideal.”
He said that the company has identified the cause of the failure in January, which he called a “frustratingly simple item: It was a filter that came loose in our second stage.” Even short-staffed, the company still plans to launch its next rocket in the third quarter, he said. It would carry a commercial satellite for a paying customer. Hart would not identify the customer.