Virgin Orbit, Richard Branson’s satellite launch company, has fallen fast

Now Virgin Orbit is negotiating with two financial institutions over a bailout package and has laid off staff, according to a person familiar with the matter. Late Thursday, after announcing the hiatus, Virgin Orbit — which went public less than two years ago at a valuation of more than $3 billion — was down more than 30%.

On Friday, Virgin Orbit ended trading 9.1% lower at 65 cents a share, from a January 2022 peak of more than $10.

It’s been a cloudy fall for the once-hot company that’s been trying to build a company that sends smaller satellites into space. Virgin Orbit’s challenges are also the latest in the ups and downs of the Branson-owned company. He has built his career around a global brand around a portfolio of businesses controlled by his closely held Virgin Group.

These companies over the years have included music, airlines, cruise ships and banking. They were hit particularly hard during the shutdowns and travel restrictions caused by the Covid-19 pandemic.

At the time, Mr. Branson was competing to support his travel and tourism-related entities and at one point promised to loan money against his private island. Some, including Virgin Atlantic Airways, have proven resilient.

Amid these troubles, Mr. Branson’s space ventures were a bright spot. In 2021, he ushered in the era of commercial space travel, beating Jeff Bezos to complete a near-space return trip on a spacecraft operated by his Virgin Galactic Holdings company. Inc.

The 72-year-old celebrated it live, without gravity in the cockpit.

That same year, he flew Virgin Orbit, which developed a new way to launch satellites on a launch vehicle that was partially carried into space under the wings of a Boeing 747. He listed the company using what is known as a special procurement company, a vehicle. popular at the time, among other things, to ease the obstacles of companies seeking to be listed on the stock exchange.

Virgin Orbit won a big 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.

The satellite industry has traditionally been dominated by large vehicles launching large satellites, but Virgin Orbit and several other competitors around the world specialize 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 completed four successful launches that have put 33 satellites into space.

However, that market has faced pressure from Elon Musk’s Space Exploration Technologies Corp., or SpaceX. SpaceX offers relatively inexpensive missions that use several small satellites from different operators. Some rocket industry executives have said they believe 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 for the first nine months of 2022.

CNBC previously reported that Virgin Orbit is laying off staff and suspending operations while it seeks funding.

Then on January 9, instead of delivering the first satellite launch from British soil, Virgin Orbit’s rocket failed to enter orbit, resulting in the destruction of the payload: nine small satellites, including those for the governments of the US, UK and Oman.

The launch was the first international flight for Virgin Orbit, which had completed successful missions in the United States. It was meant to demonstrate that its unusual Boeing 747-assisted launch strategy could be controlled from anywhere in the world.

The company said Thursday that it has nearly completed its investigation into the January glitch.

—Micah Maidenberg contributed to this article.

Write to Alistair MacDonald at Alistair.Macdonald@wsj.com