Even before Monday’s launch failure, Virgin Orbit’s finances were dismal
Enlarge / Virgin Orbit was founded by Sir Richard Branson.
On Monday evening, Virgin Orbit’s attempt to launch a rocket from the United Kingdom failed after a problem with the rocket’s second stage engine.
The US-based launch company did not provide any additional details about the cause of the accident, which resulted in the loss of nine small satellites on board. In the wake of the failure, officials tried to put a brave face on the outcome of the mission and the future of Virgin Orbit.
“We will work tirelessly to understand the nature of the failure, take corrective action and return to orbit once we have completed a thorough investigation and mission assurance process,” it said in a prepared statement. Dan Hart, chief executive of Virgin Orbit. .
However, the safe words belie a reality that the financial road ahead for Virgin Orbit is very, very difficult.
A brief history of Virgin Orbit
Virgin Orbit was started as an idea in 2011 by Sir Richard Branson as a branch of his space business Virgin Galactic, with the aim of fully utilizing the White Knight aircraft. Eventually, it was decided that the company, officially established in 2017, would use its aircraft, a modified Boeing 747-400 called Cosmic Girl, as a platform from which to launch and launch small rockets.
Lacking its own revenue, Virgin Orbit was financed for the better part of a decade by Virgin Group, the multinational company that owns and operates Branson’s various businesses, as well as a state-owned Emirati company, Mubadala Investment Company.
Independent estimates suggest that, during that time, Virgin Orbit spent up to $1 billion developing and testing its LauncherOne rocket and air launch system. The company made its first successful launch in January 2021 and has since conducted an average of one mission every six months.
An obvious question is this: with such high development costs and such a slow pace for a rocket that sells for $12 million per launch, how can Virgin Orbit be financially sustainable?
In 2021 the company responded to its short-term cash needs by going public, joining a special purpose acquisition company (SPAC). However, the funds raised by this merger were far less than anticipated. In announcing its intention to go public, Virgin Orbit said it expected to raise $383 million from the proceeds of the SPAC transaction; however, it raised only $68 million from this process and instead had to turn to private investment for an additional $160 million to continue operations.