Unable to secure funding, Virgin Orbit will cease operations and lay off 90% of the workforce

Virgo Orbit is ceasing operations “for the foreseeable future” after failing to secure a lifeline for funding, CEO Dan Hart told employees during an all-hands meeting Thursday afternoon, and will lay off about 90% of its workforce.

“Unfortunately, we weren’t able to secure the funding to provide a clear path for this company,” Hart said, according to audio of the 5 p.m. ET meeting obtained by CNBC.

“We have no choice but to make changes that are immediate, dramatic, and extremely painful,” Hart said, choking on the call, adding that “this was going to be “probably the hardest all-hands we’ve ever done in my life.” have”.

The company will cut all but 100 jobs, Hart noted, with the layoffs affecting “every” team and department. Virgin Orbit will “provide severance for each departing employee,” Hart said, with a cash payment, a benefit extension and assistance in finding a new job — with a “direct pipeline” working with sister company Virgin Galactic for recruitment is set up.

Hart has been giving brief updates to company staff every day since Monday, when Virgin Orbit last-minute pushed back a scheduled all-hands meeting to Thursday. Late-stage talks with two investors had stalled over the weekend, but Hart told staff Monday that “very dynamic” investment talks were continuing. Those investor calls continued this week — with Hart saying leadership would share any updates “as promptly and transparently as possible,” noting that email leaks “is against company policy,” according to copies of Hart’s email Mails from Tuesday and Wednesday received by CNBC.

The company has steadily pulled back more of its 750-plus employees this week from pauses in operations and furloughs that began March 15, after initially resuming some work with a “small team” on March 22. Amid the wider hiatus, Virgin Orbit has been working to complete its investigation into the in-flight failure of its previous launch and finalize preparations for its next rocket.

A Virgin Orbit representative did not immediately respond to CNBC’s request for comment.

Shareholders streamed out of the stock in extended trading, with shares selling off nearly 30% following the announcement. Virgin Orbit shares closed Thursday at 34 cents a share after falling 82% year-to-date.

Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket under the plane’s wing mid-flight. But the company’s latest mission suffered an in-flight failure, with a problem during launch causing the rocket to fail to reach orbit and crash into the ocean.

The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to continue funding the company.

Virgin Orbit was spun from Branson’s Virgo Galactic in 2017 and counts the billionaire as its largest shareholder with a 75% stake. Mubadala, the Emirates’ sovereign wealth fund, holds the second largest stake in Virgin Orbit at 18%.

The company hired bankruptcy firms to draw up contingency plans in case it couldn’t find a buyer or investor. Branson is top priority over Virgin Orbit’s assets as the company has raised $60 million in debt from Virgin Group’s investment arm.

The same day Hart announced to employees that Virgin Orbit was ceasing operations, the board approved a “golden parachute” severance plan for top executives if they are terminated “following a change of control” of the company.