Thousands of curious onlookers,wrapped up against the bitter January cold,had witnessed Virgin Orbit’s Cosmic Girl plane take off from the nearby airstrip shortly after 10pm. Tickets to watch the event had sold out faster than Glastonbury. Cosmic Girl,a modified Boeing 747,carried a rocket under its wing that would detach and blast off into space once it reached the appropriate altitude.
Sir Richard Branson’s space dreams have turned into a nightmare.AP
As attendees enjoyed themselves,Virgin Orbit triumphantly declared that its rocket had “successfully reached orbit”. However,. Minutes later,Virgin Orbit admitted the rocket had suffered an “anomaly” while blasting towards space at 17,700 kilometres per hour. The rocket failed and crashed back into the Atlantic Ocean.
That wayward mission that has now sunk the entire company. Virgin Orbit filed for bankruptcy protection in America this week.
Dan Hart,Virgin Orbit’s chief executive,partly blamed January’s failed mission for the collapse. He wrote in the company’s bankruptcy forms that it “gave rise to negative publicity and further challenges in identifying a buyer”. One notable investor who did not put up all the money that was needed was Sir Richard Branson. After spending more than $US1 billion ($1.5 billion) on Virgin Orbit,Sir Richard appears to have lost patience.
Virgin Orbit was spun out of Sir Richard’s Virgin Galactic space tourism business in 2017,with the aim of cornering the booming satellite launch market. That same year, sent 18 rockets into space.
But the company was plagued by problems from the start. Its first mission,launched in July 2020 from a runway in the Mojave desert in California,ended in failure.
Orbit found itself in a bitter dispute with a potential customer,satellite company OneWeb,which pulled out of a $US234 million contract.
And COVID led to further disruption,forcing it to halt a test flight in December 2020.
Despite this,Sir Richard pushed ahead with a stock market listing of the business in 2021,going public amid a boom in so-called special purpose acquisition companies (Spacs). The business was taken over by a merger vehicle,rather than conduct a traditional public listing.
While Orbit’s market value soared to $US3 billion after the float,the listing created new problems.
Bankruptcy filings show the company had hoped to raise $US382 million from the deal. However,the structure of the deal allowed investors who had backed the Spac to pull out before the transaction’s completion. Some 82 per cent of shareholders withdrew support,meaning it only raised $US67.8 million. The shortfall forced Sir Richard to inject more cash into the company.
Richard Branson's Virgin Orbit was meant to be England’s first rocket launched into space but it was ultimately a failure.
The Cornwall space launch had originally been slated for last summer,timed to coincide with the Queen’s Platinum Jubilee. However,regulatory wranglings meant the company didn’t secure its licence until Christmas.
Delays meant more costs. The taxpayer sunk about £9.5 million ($17.6 million) into Orbit in grant funding to support the failed Cornwall mission.
Between November and February,Sir Richard injected another $US60 million into the business. However,with Virgin burning through $US191 million last year,this was always only going to be a stopgap measure. It became apparent that the entrepreneur was no longer willing to prop up the company.
By February,the company had appointed restructurers Alvarez&Marsal to explore options and had turned to advisers Ducera to find emergency funding.
Late last month,Orbit placed nearly all staff on unpaid leave,confirming last week that 85 per cent,or 675 people,would be laid off.
According to bankruptcy filings,Orbit had just $US700,000 in “unrestricted cash” available.
Sir Richard has agreed to spend $US10.9 million to honour employee severance packages. A further $US31.6 million in so-called “debtor in possession” funding will keep a skeleton crew at the company while the bankruptcy plays out.
A court filing from Alvarez& Marsal reveals that Virgin branding will be scrubbed from the company in any sale scenario.Bloomberg
Sources close to the discussions said Sir Richard wanted to ensure an orderly transition in an effort to salvage something of the business. Virgin Group could have continued financing Virgin Orbit,a source said,but a failure to raise external funding had weakened the business case.
Some industry insiders now question how practical Virgin Orbit’s method of launch was,compared with regular vertical take-off. Shagun Sachdeva,of analyst Kosmic Apple,says launch costs were “quite high compared with direct competitors”.
Sir Richard looks set to keep funding his other space venture,Virgin Galactic,despite its own share of difficulties. Founded in 2004,crises included a crash of its space plane in 2014 that killed co-pilot Michael Alsbury. Its landmark first space tourism flight in 2021 faced an investigation by US authorities after it veered from its flight path. After lengthy delays,it hopes to return to commercial flights in the next couple of months. However,Galactic’s stock has collapsed 93 per cent since June,2021.
Orbit’s bankruptcy,and the ongoing recriminations around its failed UK mission,leave Britain’s hopes of seeding a space industry in jeopardy.
A UK Space Agency spokesman says the government remains committed to a “dynamic UK spaceflight sector”. Several other companies are hoping to conduct UK missions by 2024.
Sir Richard appears ready to erase his ties to the launch business. A court filing from Alvarez&Marsal reveals that Virgin branding will be scrubbed from the company in any sale scenario.
Hopes that Virgin Orbit would return to Cornwall to complete its mission appear to have been grounded for good.
Telegraph,London
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