RUTH SUTHERLAND reveals how Richard Branson’s space dreams have crashed to Earth

Many stories are told in the City of London about Sir Richard Branson, the tycoon who pushed his Virgin brand onto everything from banking to expensive gym memberships.

There is a story that several years ago a group of city advisers arrived for a morning meeting at Branson’s former mansion in London’s Holland Park to discuss financing his labyrinthine commercial empire.

Not only was the bearded mogul still in his robe when he greeted the immaculately dressed bankers, but to their surprise, he also showed no interest in their proposals and insisted on discussing rockets and space travel.

Stories like these may be the stuff of urban legends, but Branson’s fascination with the mysteries of the universe is beyond question. To him and his colleagues, old-fashioned billionaire trinkets such as private jets, islands and yachts are so old-fashioned.

Branson has positioned himself as Britain’s answer to America’s alien uber-capitalists, Tesla boss Elon Musk and Amazon founder Jeff Bezos. For these entrepreneurs, when it comes to status symbols, nothing less than a space rocket will do.

Musk’s Starship was on a launch pad in Texas last week and was preparing for a test flight later this month.

Blue Origin, Bezos’ aerospace company, plans to send an all-female crew into space next year, led by his 53-year-old girlfriend Lauren Sanchez.

But Sir Richard Branson can only watch from the sidelines after his ambitions are blown out of the sky. Last week, his satellite launch company, Virgin Orbit, filed for bankruptcy protection in America.

These financial consequences were probably inevitable after one of its rockets, launched in January from a spaceport in Newquay, Cornwall, malfunctioned a hundred miles above the Earth.

The event, the first-ever launch into orbit from British soil, not only saw the nine-satellite rocket lost over the Atlantic Ocean, it also brought Virgin Orbit, which was at one point valued at £2.4 billion. , to the earth. ground.

Having built an empire that spanned airlines, trains, fitness, financial services and media, it might have been a natural next step for Branson to reach for the stars.

His first step in 2004 was to set up a space tourism company, Virgin Galactic. With tickets costing $450,000, “Future Astronauts” can sign up for this – for journeys that have yet to get off the ground.

Virgin Orbit spun out of that company in 2017, after Branson experts noted that the researched technology could be used in the satellite industry.

His detractors — and he’s attracted many since he began his career in the music business in the 1970s — will no doubt enjoy his humiliation over his favorite project.

Some have expressed fears that Virgin Orbit’s demise also bodes ill for the UK’s burgeoning space industry – an increasingly important part of our economy. But the bankruptcy is mainly due to Branson’s wretched business model, which was not resilient enough to weather inevitable setbacks.

There remains ample reason for optimism in the wider space and satellite industry.

In fairness to Virgin Orbit, despite the ridicule surrounding the botched launch, the technology was praised by pundits. Before the Cornwall debacle, the company had successfully completed several spaceflights and launched 33 satellites into orbit.

However, there is no denying that the bankruptcy is a very costly embarrassment for Branson. He is pumping in around £25 million in funding through his Virgin Investments to keep the company afloat as it looks for a buyer to bail it out.

In total, Branson and Virgin Group have invested more than £800 million in the company.

Virgin Orbit’s business was founded on the claim that it settled on an innovative approach: launching high-altitude satellites.

Unlike competitors who sent them up from the ground, it propelled satellites from a rocket nestled under the wing of its modified Boeing 747, the Cosmic Girl (named after a song by the 1990s funk band Jamiroquai). This “air-launch” technique, it said, made its satellite services both cheaper and more flexible.

At least that was the theory.

In reality, the company was plagued with problems from the start. It floated to New York’s high-tech stock market Nasdaq in 2021 amid a craze for high-risk companies that had stratospheric valuations. Instead of a conventional stock listing, Branson used a so-called “Special Purpose Acquisition Company,” or Spac.

These Spacs enjoyed a brief popularity a few years ago as a way for loss-making companies to quickly list their shares. But they were always viewed with skepticism by wiser investors and have since fallen out of favour.

At the time of the Virgin Orbit float, interest rates were at an all-time low and investors were willing to take risky investments, hoping for good returns. But as interest rates started to rise, the mood changed and stock prices in technology and other high-risk sectors plummeted.

As for Virgin Orbit, its market value has dropped from a peak of around £2.4 billion to around £56 million today. Still, there were ominous signs from the start. The IPO brought in far fewer investors than hoped, and early last year Dan Hart, Virgin Orbit’s CEO, had already begun working with Goldman Sachs and Bank of America to try and raise more capital or sell the company .

The company suffered a loss of nearly £120 million in the first nine months of last year. In plain terms, it racked up huge bills with no assurance that it would ever have a chance to break into the black.

Experts say the company was aiming for 50 launches per year – a very challenging goal. The amounts just didn’t add up.

With Branson and other investors unwilling to commit new capital, Chapter 11 bankruptcy became inevitable.

Mark Boggett, the CEO of Seraphim Capital, which invests in aerospace companies, says: ‘The bankruptcy is specific to Virgin. There was a series of unfortunate events. They didn’t raise enough capital when they went public, and when the UK launch failed, they found themselves in a really difficult position.

“They had to try and raise money after a failed launch and a Spac, which was just toxic, and in a tough economic environment. It does not reflect what is happening in the market. Premium companies can raise money, no problem.’ Virgin Orbit’s failure is a blow to Cornwall – and to British taxpayers, who have provided around £9.5 million in grants to support the mission.

Spaceport Cornwall, where Virgin Orbit would have been the main operator, is holding up bravely. The boss, Melissa Quinn, who cried when Virgin’s launch failed in January, says the plan is to continue with other satellite operators.

Critics will see the episode as a testament to Branson’s evergreen ambition and personal vanity.

Whatever anyone’s opinion of the 72-year-old founder of Virgin, who still enjoys his image as a maverick, anti-establishment figure, he was right about one thing: space is an area in which Britain can excel .

But going into space isn’t just financially dangerous. The worst incident for Branson was the 2014 Virgin Galactic starship crash in the Mojave Desert, California, which killed the copilot and seriously injured the pilot.

Orbit’s bankruptcy will inevitably raise new questions about the Galactic business, which lost $500 million last year.

Potential buyers, including Texan investor Matthew Brown and possibly Musk or Bezos, will be looking for Virgin Orbit’s remains.

However, this is unlikely to be the end of Branson’s personal space odyssey. Having flown to the edge of space on a Virgin Galactic rocket plane two years ago, he’s reluctant to give up hope that he can boldly go where no British billionaire has yet gone.