The US military is raising the stakes – and expanding the field – in the high-profile competition for Space Force mission contracts.

The Space Force plans to purchase more rocket launches from companies in the coming years than previously expected, giving more companies a chance to secure billions in potential contracts.

“This is a huge deal,” Doug Pentecost, deputy program executive officer at the US Space Force’s Space Systems Command, told reporters during a briefing this week.

Earlier this year, the Space Force began the process of purchasing five years’ worth of launches, under a lucrative program known as National Security Space Launch (NSSL) Phase III.

The United States sees increasing momentum to improve its military capabilities in space, spurring the need to nearly triple the number of third-stage launches it has purchased in second-stage in 2020.

“It just amazes me,” said Pentecost. “We only estimated 36 missions for Phase 2. For Phase 3, we estimate 90 missions.”

In February, the Space Force outlined a “mutual fund” strategy to purchase launches from the companies. NSSL divided Stage 3 into two groups. Track 1 is the new approach, with lower requirements and a more flexible bidding process that allows companies to compete as rockets debut over the coming years. Path 2 represents the current approach, in which the Space Force plans to select a select number of companies for missions that meet the most demanding requirements.

Pentecost said the Space Force hosted an industry day in February to review details of the program and 22 companies attended. Since then, Space Force has made a number of tweaks to Phase 3. It has added more missions, introduced a price cap, expanded Path 2, and established an annual schedule of missions.

The government weighs bids according to a company’s “gross estimated price” to launch. This is broken down into “launch service,” which means the cost of building and launching a missile, and “launch service support,” which covers special requirements the military might have for a launch. The maximum launch service subsidy amount is $100 million per year, per company.

“We’ve implemented some cost constraints so we don’t get inflated. We don’t want to [a situation where] Everyone gets a mission—you get a mission, you get a mission, you get a mission—because there’s no real competition after that,” Pentecostals said.

“We believe all of our partners in the industry want to be the first man, so we think that will provide competitive pricing to keep our costs down,” he added.

While track 1 is expected to attract the most bids and award 30 missions, track 2 is the big show.

With Lane 2, the Space Force awards the most valuable contracts to launch national security satellites at the highest stakes.

“These are billion dollars [satellite] “The payload going into unique orbits,” said Pentecost.

Not only has Lynn 2 seen an increase in the number of missions available for grabs — it’s currently estimated at 58 launches, up from 39 in February — but Space Force also made the decision to expand the slots available for final prizes to three companies, rather than limiting them to two.

Elon Musk’s SpaceX and United Launch Alliance, the joint venture of Boeing And Lockheed MartinThey were supposed to be the main contenders for Lane 2, but now there’s an open door for another company like Jeff Bezos’ Blue Origin.

Space Force will allocate 60% and 40% of the 51 missions to the two largest bidders, respectively, and the remaining seven launches will go to the third-place bidder.

Regardless of where a company ranks, it must demonstrate that it can meet all of Track 2’s requirements, which include having launch sites on both the East Coast and West Coast, and the ability to reach nine high-accuracy “reference” orbits, many of which are much farther from Earth than the LEO requirements of Track 1.

Asked by CNBC how many companies are developing missiles that can meet these requirements by the launch deadline, a Space Force spokesperson declined to specify, saying the Army is “tracking several” that are “expanding their launch capabilities into most of these orbits.”

“Hopefully, not only will ULA, SpaceX, and Blue Origin compete for that, there are others who have interest in the past.” Chad Mellon, chief of procurement and integration at Space Systems Command, said during the briefing.

Space Force presents an annual festival for the month of October. 1 Deadline for assignment of tasks to companies that have won a contract.

Pentecost clarified that the first missions will end in October 2025, but the aforementioned contracts do not guarantee assignments, which protects the Space Force from delays that companies may experience in developing and flying missiles.

“You could have won the contract already, and you had this great plan about how you were going to fly [fiscal year] 2027. But since you haven’t flown yet, and I have a satellite that needs to fly in a couple of years, we’re not going to give you that task—we’re going to pass it on to the other person,” Pentecostal said.

Space Force aims to finish its solicitation for bidders by September and then submit all proposals by December, with contracts awarded in October 2024.

The main driver for this push, Space Force officials said, is “capacity assurance,” since there are “a lot of other companies” trying to buy satellite launches and the Space Force needs to close their orders.

“We wanted to make sure that we basically hedged against the scarcity of launches that could happen because if there is absolutely too much demand and everyone is [buying]”The prices can be very high,” Mellon said.

But despite that fear, Pentecost said that 2026 “looks like the sweet spot” when a number of the companies’ rockets will be developed and ready to fly. And the companies that stay on the right track will have the upper hand in the third phase of the NSSL.

“If you fly before then, or if your schedule shows you will fly before then, you will have significant strengths, which will put you in a better position to win the best provider or second best in this competition,” said Pentecost.

A lot has changed in the four years since one of the aviation industry’s biggest air shows took place in person.

The Covid-19 pandemic has devastated the demand for travel, the airline industry has dumped thousands of experienced workers and a roller coaster appetite for new planes has wreaked havoc on new aircraft production rates.

After all, the Paris Air Show—a trade event in which companies get a chance to showcase new technology, commercial and military aircraft, and strike deals—returns Monday during a surge in demand for air travel, as airlines starve to feed. . The question is whether BoeingAirbus and its many suppliers can catch up.

“This creates pressure on the order books – it creates upward momentum in used aircraft leasing prices and forces airlines to make concessions,” said Andy Cronin, CEO of aircraft leasing Avolon.

Flight analytics firm IBA estimated last week that there could be orders for about 2,100 aircraft during the show as airlines replace aging planes and prepare for future growth in air travel.

over the past year, Boeing Recorded large orders or preliminary agreements from clients incl United AirlinesSaudi Arabia and the new Saudi carrier, Riyadh Air. Air India’s huge order earlier this year included both Boeing and Airbus aircraft.

The head of Turkish Airlines told reporters last month that the company plans to order about 600 aircraft, both wide-body and narrow-body. Demand would be the largest ever for a single airline, though it’s not clear if that will meet in time for supply.

The IBA’s chief economist, Stuart Hatcher, wrote in the June 15 forecast that Delta AirlinesMalaysia Airlines and KLM Air France may be buyers, but the timing is not yet certain. He said Air Baltic might also look to expand its fleet of Airbus A220s.

“It may still be too early to call any Chinese expansion just yet given the political climate, but I wouldn’t be surprised to see top-up requests,” Hatcher wrote.

The main challenge for manufacturers now is to increase production. The slots of narrow-body jet aircraft, such as the Boeing 737 and Airbus A320, have been sold for years. Now that long-haul flights are back, some airlines may also be looking to expand their fleets of large, long-haul aircraft.

But customers around the world have had to wait longer than expected for new planes as Boeing, Airbus and a worldwide network of suppliers try to ramp up production. This has resulted in limited airline capacity, making airfares high.

Qantas CEO Alan Joyce told CNBC last week that he expects supply chain problems to continue into 2025.

Boeing and Airbus are scrambling to raise production rates for the coming years to meet this demand.

Production delays have also pushed up charter prices for new and old aircraft as airlines look for other opportunities to boost flights.

New Boeing 737 Max 8s are being rented for about $350,000 a month in July, up from $305,000 in January 2020 as the pandemic began, according to IBA estimates. The new Airbus 320s will go for $355,000, up from $325,000 during that time. Older versions are close to pre-pandemic levels.

“People just want their planes,” said Richard Aboulafia, managing director of consultancy AeroDynamic.

United Airlines“The plan to refurbish cabins on its aging narrowbody planes is behind schedule due to supply chain strains,” the carrier told CNBC this week. Upgrades include larger luxury cabins, seatback entertainment screens throughout the aircraft, Bluetooth capabilities and other amenities.

The Chicago-based airline previously expected to retrofit 100 of its narrowbody planes with the new interiors by the end of the year, but now expects 60 to be completed by then, a spokeswoman said.

“The reality is supply challenges across the board be that as it may [inflight entertainment] Systems, chips, seats and many other things are more challenging than they’ve ever been in our business,” Andrew Nosella, United’s chief commercial officer, said on an earnings call last week.

United unveiled the overhauled cabins in June 2021 following an order for 270 new Boeing and Airbus’ narrowbody jets, in an effort to refresh its brand as airlines compete for passengers in the travel boom, especially big spenders.

United also said it expects to have more premium seats for sale per outbound flight than any other North American airline by 2026 as travelers compete for what could be elusive upgrades and the ranks of elite travelers with piles of frequent flyer points swell.

United’s Nocella said last week that the carrier will have multiple production lines to refresh the interiors of its narrow-body jets this summer, helping to pick up speed.

The company expects that one in three aircraft in its narrow-body fleet, including new aircraft, will have had an in-house upgrade by the end of the year.

“It’s going to take a little longer than we originally expected,” he said. He added that the United Airbus A319 was recently modified and is scheduled to fly soon.

The airline has targeted 2025 to complete the narrowbody upgrades, but it’s unclear if United will meet that target.

Separately, United said all of its wide-body aircraft will be equipped with premium economy seats and Polaris seats, the carrier’s first class on international and other long-haul flights, by August.

Other airlines such as Jet Blue And Delta Airlines They have also added amenities on their aircraft in recent years, upgrading their first-class classes, installing new seats and adding some services, including free Wi-Fi.

Delta executives said revenue growth for premium seats such as business class or premium economy has outpaced sales from the standard coach.

“We’re seeing a high degree of stickiness with these products,” Delta president Glenn Hounstein said on the company’s quarterly call earlier this month. “So once you start flying in those cabins, you don’t tend to go back.”

Boeing It warned Thursday that it will likely have to scale back deliveries of its 737 MAX jet in the near term due to a problem with a part by the supplier. Soul Aviation Systems.

Boeing said its supplier told the company that a “non-standard” manufacturing process was used in two assemblies in the rear fuselage. It said the problem affects the 737 Max 8, the airline’s most popular model, including customers American Airlines And Southwest Airlines. It also affects the 737 Max 7, 737 8200 and P-8 aircraft.

Boeing said the problem is not “an immediate flight safety issue and the fleet in service can continue to operate safely.”

The company said Boeing has notified the Federal Aviation Administration of the problem and is working to inspect and remediate the fuselage as needed. The FAA said Boeing brought it to the attention of the matter and also said there was no immediate safety issue.

However, the problem is likely to affect a significant number of 737 MAX aircraft that have not been delivered, either in production or in storage.”

“We expect 737 MAX deliveries to decrease in the near term while this required work is completed,” Boeing said in a statement. “We regret the impact of this issue on affected customers and are in contact with them regarding the delivery schedule.” “We will provide additional information in the coming days and weeks as we better understand the effects of delivery.”

The problem, the latest in a series of production issues, is plaguing Boeing as it strives to ramp up production and deliveries of its best-selling jet while customers wait for new planes to take advantage of the upturn in travel. Boeing will likely brief investors on the issue during its annual shareholder meeting, scheduled for Tuesday.

Boeing shares fell 5 percent on Friday. Spirit AeroSystems shares fell 20%.

Spirit manufactured some of the airframes used in Boeing’s planes and said in a statement that it had notified Boeing of a “quality problem” with some 737 models.

“Spirit is developing an inspection and repair of the affected fuselage,” the company said. “We continue to coordinate closely with our customers to resolve this issue and minimize impacts while maintaining our focus on safety.”

It is the latest production problem for Boeing and its customers. Boeing earlier this year paused deliveries of its 787 Dreamliners for several weeks to address a data analysis flaw, and in 2021 and 2022 it suffered other production defects on its wide-body jets that halted deliveries for several months.

On Tuesday, the company announced deliveries of 64 aircraft in March, the highest number since December, amid an industry-wide shortage of new aircraft.

Airline executives have cited supply constraints on aircraft as among the main challenges in ramping up flying ahead of the peak travel season.

“We are aware of the issue and are working with Boeing to understand how it may affect our Max shipments,” an American Airlines spokesperson said in a statement.

Southwest said in a statement that it expects the issue to affect the delivery schedule for the new MAX aircraft and that it is discussing details of that schedule for this year “and beyond.”

United said they did not expect any “significant impact” on their capacity plans this summer or the rest of 2023.

— CNBC’s Leslie Joseph and Phil LeBeau contributed to this report.

NEWARK, N.J. — Faced with crowded airports, rising costs, a shortage of pilots, and a resurgence in travel demand, airlines are increasingly turning to the same remedy: bigger planes that hold more passengers.

The 11 largest US airlines averaged more than 153 seats last year on domestic flights, up from about 141 in 2017, according to flight data firm Cirium. In April, US airlines took 0.6% more seats into their domestic schedules than in the same month in 2019, despite operating 10.6% fewer flights.

The trend toward larger planes, part of a strategy known in the industry as “upgrading,” means airlines can sell more seats per flight and settle for fewer planes, which are in short supply. While more passengers per plane lowers unit costs for airlines, that means fewer flight options for consumers.

For example, United Airlines It said its flights have 20 more seats per flight in its full network than in 2019.

Rodney Cox, United’s vice president of airport operations at the carrier’s hub at Newark Liberty International Airport, told CNBC last month that it’s difficult to increase the number of flights to and from the airport, which is one of the largest in the country. not crowded.

“The way we continue to grow our model and grow the business is to upgrade our flights,” he said.

United said last month it would fly about 3,600 domestic routes using wide-body aircraft. The airline has also designated the 777, the largest plane in its fleet with 364 seats, to fly between major hubs and Orlando, Florida, during spring break, a spokeswoman said.

Early in the Covid pandemic, US airlines reallocated their largest planes to domestic routes when international travel was hampered by the crisis and travel restrictions. Now that international flights are starting to pick up, the competition for those planes is even more intense.

Cox noted that there are limits to the number of flights an airline can increase, especially with its larger aircraft.

“Not every gate is equal,” he said. “You can’t put on a wide body [airplane] on each gate.

The trend towards larger planes It is becoming increasingly important during what airline executives expect to be a busy spring and summer with shortages of pilots, air traffic controllers and new aircraft.

United Cox vice president said keeping the operation running smoothly in busy Newark is key. If the planes don’t take off fast enough on schedule, he said, because of the limited number of gates, “you’ll see it turn into a parking lot.”

Airlines and federal officials have agreed to curtail flights in hopes of avoiding a repeat of this summer’s flight cuts and schedule delays at the busy airports serving New York and Washington, DC.

Last month, the FAA said it would allow airlines to cut back flights at airports serving New York City and Washington’s Reagan National Airport as a way to avoid disruptions.

American Airlines He said that in response to the FAA-sanctioned slot waivers, he will temporarily reduce frequencies on select routes from LaGuardia Airport and Newark this summer.

“We are proactively engaging with affected customers to provide alternative travel arrangements,” a spokeswoman said. The airline plans to reallocate aircraft from the reduced frequencies to routes at its hubs at Dallas-Fort Worth International Airport, Chicago O’Hare and Philadelphia International Airport.

United Airlines said in a statement Thursday that in response to the FAA’s plan, it will reduce peak daily flights in New York and Newark from 438 to 408 and reduce service from the New York area to Washington, DC. The company said it still plans to operate 5% more seats at those airports compared to the same month in 2019 and expected less than 2% of customers to be affected.

Delta AirlinesThe chief operating officer also told the FAA that the airline intends to obtain waivers that would allow it to reduce flights.

The FAA said it expects “airlines to take measures to minimize the impacts on passengers, including operating larger planes to carry more passengers and ensuring that passengers are fully informed of any potential disruptions.”

Even so, some airlines are facing challenges in switching to larger planes. JetBlue Airwaysfor example, all narrow-body aircraft operate.

“We don’t have 70 seats that we can turn into 150[-seater]Robin Hayes, CEO of JetBlue, told CNBC last week. And even the airlines that do, you’re just taking seats from somewhere else. “

In addition, the airline does not contract with regional carriers for as many of its flights as the major US carriers.

“This will have a very significant financial impact on JetBlue and our customers,” Hayes said of the reduced capacity. “Small communities always have a disproportionate impact on that.”

To help increase the number of passengers per plane, United and other network carriers are also working to reduce their reliance on regional feeder airlines, where pilot shortages are acute and unit costs high.

Delta said 70% of its domestic flights this year are operated by the main carrier, up from 55% in 2019. Seats per flight increased by 15 from 2019, a spokesperson told CNBC.

Delta has also shifted from regional to mainline aircraft such as Airbus A320s and Boeing 737s on traditional business routes such as Boston to Chicago, Seattle to San Francisco, and Los Angeles to Las Vegas. A spokesperson said it has completely canceled regional flights to Las Vegas, Houston, Dallas/Fort Worth and San Antonio, Texas, and replaced them with larger ones.

Some major airlines have suspended services to some smaller airports, citing a shortage of pilots for regional airlines. America last year left cities including Dubuque, Iowa, and United recently said it would stop flying to Erie, Pennsylvania, in June. Delta also said it would pause service at State College, Pennsylvania, and La Crosse, Wisconsin that month.

Faye Malarkey said reducing regional flights instead of mainline flights “could cut departure options in half for travelers, meaning long layovers, longer journey time and cost burdens, but it could also mean that one city it previously served could not be served.” “. Black, president and CEO of the Regional Airline Association.

“This is additional harm to small communities who don’t have passengers to fill on larger planes,” she said.

– CNBC Gabriel Curtis Contribute to this article.

not long ago, Virgin Orbit It was a rarity among American missile makers, and New York executives were celebrating the first public stock.

A true spectacle of the marketing pizza that helped Sir Richard Branson build his Virgin Empire, he displayed a mock-up of a rocket in the middle of Times Square.

The deal, facilitated by the so-called blank check company, gave Virgin Orbit a valuation of nearly $4 billion. But that December 2021 moment — when the craze surrounding public offerings centered around special purpose acquisition companies, or SPACs, was fading — I previewed the coming pains.

Now, Virgin Orbit is on the verge of bankruptcy. On Thursday, the company halted operations and laid off nearly all of its employees. On Friday, its shares traded at about 20 cents, bringing its market value to about $74 million.

When Virgin Orbit closed the SPAC deal, it had raised less than half of the projected roughly $500 million due to high shareholder redemptions, shortening its runway. With broader markets turning against riskier but unprofitable assets such as many of the new space stocks, Virgin Orbit’s shares have begun to steadily slide, limiting its ability to raise significant outside investment.

Branson, Virgin Orbit’s largest shareholder, was unwilling to fund the company further, CNBC previously reported. Instead, he began to hedge his 75% stake through a series of debt rounds. This flashy British billionaire debt gives first priority to Virgin Orbit’s assets in the now imminent case of bankruptcy.

While Virgin Orbit promoted a flexible and alternative approach to launching small satellites, the company was unable to reach the launch rate necessary to generate the revenue it desperately needed.

Virgin Orbit’s technical staff acquitted themselves well because of the company’s short existence, but were eventually undone by the financial mismanagement of its leaders. It’s an oft-told story in the history of the space industry: Exciting, or even innovative, technologies don’t necessarily equal big business.

It became one of the few US rocket companies to successfully reach orbit with a specially developed launch vehicle. It has launched six missions since 2020 — with four successes and two failures — through an ambitious and technically challenging process known as an “air launch,” with a system that uses a modified 747 aircraft to drop a mid-flight missile and send small satellites into space.

But Virgin Orbit dug in close to $1 billion, flying missions only twice a year while payroll expenses soared. The company’s leadership was aware of the deteriorating situation and lack of progress, and even considered changes last summer to make the business more agile. But no clear or dramatic plan came to fruition – leading to Thursday’s downfall.

This story brings together insights from CNBC’s discussions with company insiders and industry investors over the past several weeks, as well as from regulatory disclosures, to explain where things went wrong for Virgin Orbit. These people asked not to be identified in order to discuss internal or competitive matters.

A Virgin Orbit spokesperson declined to comment for this story.

Virgin Orbit is separated from space tourism company Branson, Virgo galaxy, in 2017, after a team within the latter’s sister company saw the potential of using an aircraft as a satellite launch pad. While “air-launching” satellites was not a new idea for Virgin Orbit, the company aimed to outpace the air-launched Pegasus rocket — developed by Orbital Sciences, now owned by Northrop Grumman — for a fraction of the cost per mission.

Virgin Orbit is headquartered in Long Beach, California, and has flown most of its missions from the Mojave Air and Space Port. The exception to this was its most recent launch, which launched from Spaceport Cornwall in the UK. Virgin Orbit has been working with other governments to provide fly-by-wire launches from airports around the world, signing agreements with Japan, Brazil, Australia and the island of Guam.

The stated flexibility and potential of Virgin Orbit’s approach has attracted a great deal of interest from leaders in the US national security community. After meetings with senior Pentagon officials in 2019, Branson declared Virgin Orbit “the only company in the world that can replace [satellites] within 24 hours” during a military conflict.

At the time, Air Force acquisition commander Will Roper said he was “very excited about the small launch” after meeting with Branson. He said the US military has “a lot of money to invest” in purchasing missile launches.

The company had hoped to launch its first mission as early as 2018, but that goal kept moving every six months or so. Ultimately, Virgin Orbit launched its first mission in May 2020, which failed shortly after the rocket was launched from the aircraft. It successfully entered orbit for the first time in January 2021.

Given the company’s burn rate of close to $50 million a quarter, Virgin Orbit was targeting profitability once it beat the launch rate, or cadence, of a dozen missions a year. When Virgin Orbit CEO Dan Hart announced to CNBC that the company was aiming for seven rocket launches in 2022, it was to build on that momentum.

At the same time, Virgin Orbit was already in deep financial trouble – with a total shortfall of $821 million at the end of 2021, due to continuous losses since its inception. While Virgin Orbit aimed to launch seven missions last year, that number has been steadily directed down quarter by quarter, and 2022 closed out with just two completed lunches — the same as the previous year.

Some people within the company who have criticized Virgin Orbit’s implementation have pointed to the backgrounds of several of its executives Boeingwhich has had its share of space-related hurdles over the years.

Virgin Orbit CEO Dan Hart spent 34 years at Boeing, where he was previously vice president of Government Space Systems. COO Tony Jenges joined Virgin Orbit from satellite broadband company OneWeb, but prior to that spent 14 years in Boeing’s satellite division. Chief Strategy Officer Jim Simpson also spent more than eight years in Boeing’s satellite division before joining Virgin Orbit.

No one has confirmed that the company fired the same number of rockets in one year with a crew of 500 as it did with a workforce of more than 750. Others complained of a lack of coordination between departments, with projects and spending running in silos to one another – leading to disruptions in schedules.

Two people mentioned the waste of ordering materials. For example: A company will buy enough expensive items with a limited shelf life to build a dozen or more missiles, but then only make two, which means it will have to shell out millions of dollars worth of raw materials.

When Virgin Orbit announced an employee furlough on March 15, people familiar with the situation said the company had about six rockets in various states of production at its Long Beach plant.

As the lack of a financial lifeline made the situation increasingly desperate, many Virgin Orbit employees expressed frustration with how Hart communicated the company’s position – and even more so with the lack of clarity after the furlough.

On the day of the initial halt to operations, people described company leadership frantically spinning while several employees stood by, waiting for word on what was going on. One person confirmed that the tumultuous and sudden vacation happened because the executives tried to keep the company alive for as long as possible. Several employees expressed disappointment that Hart held the all-encompassing meeting around March 15, spoke from his office rather than face-to-face, and did not answer any questions after the announcement of the cessation of operations.

That frustration continued after the break, as employees were confused by the lack of specific details investors were talking about for Virgin Orbit’s leadership. Thursday’s update on the deal’s failure came as no surprise to a workforce that has been largely forgotten. Many were already looking for new jobs.

The focus of Virgin Orbit’s strategy became obvious and essential soon after it went public.

Virgin Orbit aims to raise $483 million with the SPAC, but large recalls mean it has raised less than half of that, resulting in $228 million in total proceeds. The money it raised came from the minority SPAC shareholders who remained on hold, as well as private investment from Virgin Group, UAE sovereign wealth fund Mubadala, Boeing and AE Industrial Partners.

Unlike sister company Virgin Galactic, which built its cash reserves to more than $1 billion through equity and debt sales after going public in October 2019, Virgin Orbit has not built its cash coffers. One person stressed that this means that leadership has to step back and make changes to run the company in a more agile way, to rebuild momentum.

Then Virgin Orbit’s apparent strength in the national security sector began to falter. Although half of its missions are flown by Space Force satellites, the company lost out to rival Firefly Aerospace for a launch contract under the “Tactically Responsive Space” program. The mission was awarded in October, and it seemed right up the alley for Virgin Orbit, especially since the previous mission under this space force program flew on a similar air-launched Pegasus rocket.

With the financial situation worsening, a few bankers who spoke to CNBC wondered why the search for a deal had been delayed. According to one banker, Virgin Orbit could quickly raise $10 million to $15 million to fill the gap by the time it finds a larger buyer. Another investor estimated that Virgin Orbit has about $270 million in tangible net assets, which increases the likelihood of a wholesale deal despite its low market value.

The white knight appeared to appear last week in the form of Matthew Brown, who discussed an 11-hour deal with Virgin Orbit, pumping up to $200m into the company. But the talks collapsed within days. The company continued discussions with another unnamed investor last week.

But in Hart’s words Thursday, Virgin Orbit “has not been able to secure financing to provide a clear path for this company.”

And while the 675 employees laid off on Thursday likely have strong job prospects, Virgin Orbit now appears headed for bankruptcy.

Virgin Orbit It is scrambling to secure a financing lifeline and avoid bankruptcy, which could come as early as this week without a deal, CNBC has learned.

The rocket builder halted operations last week and relegated most of the company, CNBC first reported, as it sought a new investment or potential purchase.

Virgin Orbit CEO Dan Hart and other senior leaders held daily conversations with interested parties over the weekend, according to people familiar with the matter, who asked not to be identified in order to discuss internal matters.

During a comprehensive meeting last week, Hart told employees that the company hopes to provide an update on the situation as soon as Wednesday.

Meanwhile, top talent is already hitting the job market: many of Virgin Orbit’s 750 employees are looking for work opportunities elsewhere. This talent ranges from executives to chief engineers and their pioneers to program managers actively seeking and finding new jobs, according to a CNBC analysis.

While the door is still open to avoid bankruptcy, people close to the situation describe a sense of panic as the company struggles to close a deal. A potential buyer has rejected the proposed sale price of nearly $200 million, the person told CNBC — a price just below the company’s market value as of Friday’s close.

At the same time, one person said Virgin Orbit is preparing for a potential bankruptcy declaration as soon as this week. CNBC has learned that Virgin Orbit has hired two companies — Alvarez, Marsal and Ducera Partners — to draw up restructuring plans in the event of bankruptcy. Sky News first reported that the companies had been contracted.

A Virgin Orbit spokesperson declined to comment.

Shares of Virgin Orbit have continued to fall since it paused operations, with its stock falling to close at $0.52 a share Monday.

The company has developed a system for sending satellites into space using a modified 747, which drops a rocket from under the plane’s wing in mid-flight. Its last mission failed mid-flight, and its rocket failed to reach orbit.

The company was born out of Richard Branson Virgo galaxy in 2017 and the billionaire is its largest shareholder with an ownership percentage of 75%. The UAE’s sovereign wealth fund Mubadala owns the second-largest stake in Virgin Orbit, with an 18% stake.

But the company has struggled to maintain its cash coffers. It went public in December 2021 near the end of the SPAC craze and hasn’t been able to tap the markets to raise money in the same way as sister company Virgin Galactic, which has built its cash reserves to more than $1 billion through equity and debt sales.

Virgin Orbit aims to raise $483 million with the SPAC, but large recalls mean it has raised less than half of that, resulting in $228 million in total proceeds. The money I was able to collect came from Boeing and AE Industrial Partners, among others.

Virgin Orbit has been looking for a financial lifeline for several months now. Branson was unwilling to fund the company further, people familiar with the matter said, and instead shifted his strategy to a value salvage.

Since the fourth quarter, Virgin Orbit has raised $60 million in debt from the investment arm of the Virgin Branson Group – giving it first priority over Virgin Orbit’s assets. Around the same time, I hired Virgin Orbit Goldman Sachs And American bank To explore other financial opportunities, ranging from minority stake investment to outright sale.

People told CNBC that George Mattson, who sits on Virgin Orbit’s board, was heavily involved in the company’s sale. Mattson spent nearly two decades as a banker at Goldman Sachs, before he co-founded a SPAC called NextGen, which floated Virgin Orbit at $3.7 billion.

Virgin Orbit revealed in a filing on Monday that it has agreed to a severance plan for its senior executives, if they are terminated “following a change in control” of the company. The plan covers Hart, as well as Chief Strategy Officer Jim Simpson and Chief Operating Officer Tony Jenges, and includes a base compensation payout and annual bonuses. In the event of termination, Hart will receive cash compensation equal to 200% of his base salary, which is $511,008, according to FactSet.

LONG BEACH, Calif. — It’s only a few days into the New Year, but the Relativity Space Factory hasn’t been quiet, a hive of activity with massive 3D printers buzzing and making construction noises.

Now about eight years after its founding, Relativity continues to grow as it pursues a new method for manufacturing rockets from mostly 3D-printed structures and parts. Relativity believes its approach will make building orbital-class rockets much faster than conventional methods, requiring thousands of fewer parts and enabling changes to be made across software—with the goal of creating rockets from raw materials in less than 60 days.

The company has raised more than $1.3 billion in capital to date and continues to expand its footprint, including the addition of more than 150 acres at NASA’s Rocket Engine Test Center in Mississippi. Relativity was named to CNBC’s Disruptor 50 last year.

The company’s first rocket, known as Terran 1, is currently in the final stages of preparation for its inaugural launch from Cape Canaveral, Florida. This missile is built at “The Gate,” the 120,000-square-foot factory the company built in Long Beach.

But earlier this month, CNBC took a look inside “The Wormhole:” the more than 1 million square foot facility where Boeing The previously built C-17 is where Relativity is now filling in with machines and building its own larger line of reusable Terran R missiles.

“I actually tried to kill this project a few times,” Relativity CEO and co-founder Tim Ellis told CNBC, referring to one of the company’s newest additive-making machines — this one internally codenamed “Reaper,” a reference to the StarCraft games. – which represents the fourth generation of the company’s Stargate printers.

Unlike the previous Stargate generations of Relativity, which are printed vertically, the fourth generation that builds the main structures of Terran R is printed horizontally. Ellis emphasized that the change allows its printers to manufacture seven times faster than the third generation, and has been tested with speeds up to 12 times faster.

“[Printing horizontally] It seems very counterintuitive, but it ends up enabling a certain change in the physics of the print head which is then much faster,” Ellis said.

So far, the company uses about a third of Boeing’s cavernous former facility, where Ellis said Relativity has room for about a dozen printers that can produce Terran R missiles at a pace of “several a year.”

For 2023, Ellis said, Relativity is focused on getting Planet Earth 1 into orbit, proving that its approach works, and also showing how “quickly we can advance in additive technology.”

He added, “Looking at the macro economy, we’re obviously still very pessimistic, and we’re making sure we’re delivering on results.”

Correction: A previous version of this story missed the company’s speed test of 3D printers.

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Markets have kept their heads above water so far this month, even as economic data points to a possible recession and corporate earnings have been mixed, at best. On that last point, more than 70 S&P 500 companies reported quarterly results this earnings season, and about two-thirds performed better than expected, according to Refinitiv. So there’s been some time yet, and investors will be paying particular attention to what guidance companies have to offer, as economic concerns grow. On Wednesday’s earnings schedule: BoeingAnd AT&TAnd TeslaAnd ibm And Levi Strauss. Read live market updates here.

Microsoft It may have beaten street earnings, but the company posted the slowest revenue growth since 2016, and its forecast suggests the bad trends will continue. The tech giant said on Tuesday that it expects revenue growth to continue to slow. Microsoft’s Windows and Office business declined at the end of last year, and further declines are likely to come as the PC market shrinks again. New business growth for the company’s Azure cloud unit also eased in December, which didn’t bode well for the early part of this year. “In our commercial business, we expect the business trends we saw at the end of December to continue into the third quarter,” said Chief Financial Officer Amy Hood.

Inflation remains high – the consumer price index for December rose 6.5% from a year earlier – but it is slowing. This is good news for consumers, but only up to a point. Many companies have raised prices, but just because costs are lower doesn’t mean they’ll cut prices across the board, CNBC’s Melissa Rybko and Amelia Lucas explain. One reason: Many companies hold long-term contracts that fix prices months in advance for goods and freight. Also, companies that were pressured by higher costs earlier will want to see their profit margins improve. “We don’t take something that was $1, move it to $1.10 and then, after a year or two, move it to $1,” Utz brands CEO Dylan Lysette previously said.

Tesla It shook up the auto industry recently when it cut prices on several models in multiple markets. The move came after the electric vehicle leader reported weaker-than-expected year-end deliveries, suggesting that CEO Elon Musk is trying to boost demand. It also puts new pressure on Tesla’s competitors, incl stronghold And GM, as they struggle with rising material costs while trying to ramp up their production of electric vehicles, having set ambitious targets for the next decade. The used market for Teslas is also paying a price: During the first 17 days of January, prices for cars from 2020 or later fell to an average price of $58,657, down from a June peak of $76,626, according to Edmunds. Tesla reports its earnings after Wednesday.

Rupert Murdoch on Tuesday called off his plan to reunite with the Fox News owner Fox Corporation. And News Corp, owner of The Wall Street Journal and HarperCollins, after deciding “the combination is not optimal for shareholders.” The Murdoch family has effective control of both companies, which make up a vast but fading empire to the interests of the media. In October, Fox and News Corp. formed a special committee to explore a potential deal, which would have re-merged the two companies nearly 10 years after they split. But some large non-Murdoch shareholders have rejected it, suggesting that this would not be an easy move for the media mogul and his son, Lachlan Murdoch, who is a senior executive at both companies. Meanwhile, News Corp. is in advanced talks to sell Move Inc. , owner of realtor.com, to CoStar Group.

— CNBC’s Yun Lee, Jordan Novette, Melissa Rybko, Amelia Lucas, Michael Wayland, and Lillian Rizzo contributed to this report.

– Follow the broader market actions like a pro CNBC Pro.

CNBC’s Jim Cramer on Wednesday offered his thoughts on whether companies that recently reported their quarterly earnings are investable, based on his newly introduced grading system.

“The main reason this market is so tough is because we’re finally getting earnings that aren’t that hot, and yet Wall Street isn’t taking its usual stance of buying NABAF-released stocks — which isn’t as bad to be feared,” the Mad Money host said.

He added, “Six months ago, you could get rid of Napaf all the time. Tolerance prevailed in two or three days. It’s not like that anymore.”

To keep pace with this new market, Cramer devised a new way to rank the stocks of companies that recently announced their quarterly earnings.

“There are tons of stocks that can go up now that they’ve fallen so hard from their highs, but we need to figure out what can make those spikes possible,” he said.

This is Cramer’s three-tiered stock rating system:

• Exclamation mark (!): This symbol represents “Good news means that the stock is entitled to rise despite the broader sell-off,” Cramer said.
• A question mark (?): That means the stock is “going down pretty much no matter what,” he said.
• the value :

“Earnings get an asterisk if something goes wrong away from the company, you can easily explain it. … So maybe the stock is worth buying here because it might be pardoned later,” Kramer said.

“An exclamation point? Yes. A question mark? No. The star, maybe, just maybe, and that’s where the money can be made after the profits, because they’re the decent guys that aren’t even up and running yet,” Cramer said.

1. Here are the stocks he chose to highlight and his score for each: Visa:
2. ! Microsoft:
3. ! dead:
4. ! Boeing:
5. ? Texas Instruments:
6. *

the alphabet: *