Two months ago, Richard Branson’s Virgin Orbit VORB -9.14%
Holdings Inc. was about to make history by launching the first satellites into orbit from the billionaire’s homeland of the UK
That high-profile launch from Cornwall, England went badly, ending in the destruction of the satellite payload and sparking an investigation into what went wrong.
Virgin Orbit is now in talks with two financial institutions about a bailout and has sent staff on leave, a person familiar with the matter said. Late Thursday, after announcing its operational pause, Virgin Orbit — which traded at a valuation of more than $3 billion less than two years ago — fell more than 30%.
On Friday, Virgin Orbit ended 9.1% lower at 65 cents per share, down from more than $10 at its January 2022 high.
It’s been a quick fall for a once-hot company that’s been trying to build a business by launching smaller satellites into space. Virgin Orbit’s challenges are also the most recent boom-to-failure trajectory for a company owned by Mr. Branson. He has spent a career building a global brand around a portfolio of companies controlled by his tight-knit Virgin Group.
Those businesses over the years included music, airlines, cruise ships, and a bank. They were particularly hard hit during the Covid-19 pandemic closures and travel restrictions.
At the time, Mr. Branson was rushing to support his tourism and travel-related entities, at one point promising to borrow money against his private island. Some, including Virgin Atlantic Airways, have proved resilient.
In the midst of all those trials, Mr. Branson a bright spot. In 2021, he ushered in the era of commercial space tourism by beating Jeff Bezos in completing a return trip to near space aboard a spaceplane from his Virgin Galactic Holdings. Inc.
The 72-year-old celebrated with a live-streamed gravity-free float in the cabin.
In the same year, he floated Virgin Orbit, which developed a new way to launch satellites in a launch vehicle carried into space partially under the wing of a Boeing 747. popular at the time because of, among other things, the removal of barriers for companies that wanted to go public.
Virgin Orbit won a major vote of confidence in the industry when Boeing Co. agreed to invest. Mubadala Investment Co., the sovereign wealth fund of the United Arab Emirates, is also a major investor.
While the satellite industry has traditionally been dominated by large vehicles launching large satellites, Virgin Orbit and several other rivals worldwide have specialized in smaller satellites in lower orbits, targeting civilian, military and commercial customers at the lower end of the market. Before the failed launch in the UK, Virgin Orbit had had four successful launches, taking 33 satellites into space, it said.
However, that market is under pressure from Elon Musk’s Space Exploration Technologies Corp. or SpaceX. SpaceX offers relatively inexpensive missions that deploy several small satellites from different operators. Some rocket industry executives have said they think there is only room for a few small launch providers.
Virgin Orbit’s share price fell steadily for most of last year. It reported a loss of about $140 million in the first nine months of 2022.
CNBC previously reported that Virgin Orbit would lay off staff and suspend operations to seek funding.
Then, on January 9, Virgin Orbit’s rocket failed to reach orbit, instead delivering the first satellite launch from British soil, leading to the destruction of its payload: nine small satellites, including for the governments of the US, UK and Oman.
The launch was the first international mission for Virgin Orbit, which had completed successful missions in the US. It was meant to prove that its unconventional Boeing 747-assisted launch strategy can be executed from all over the world.
The company said on Thursday it is nearly done with its investigation into what went wrong in January.
—Micah Maidenberg contributed to this article.
Write to Alistair MacDonald at Alistair.Macdonald@wsj.com
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