SpaceX announces layoffs due to 'difficult challenges ahead'

Company operating at Kennedy Space Center to lay off 10 percent of staff

By Emilee Speck - Digital journalist
Joe Raedle/Getty Images

ORLANDO, Fla. - SpaceX will lay off approximately 10 percent of its workforce at the start of 2019 during a critical time for the California-based commercial space company as it helps NASA return to launching astronauts from the Space Coast again for the first time since 2011.

The Los Angeles Times first reported the company's plans to reduce its 6,000 employees by about 10 percent. Led by CEO Elon Musk and CFO Gwynne Shotwell, SpaceX's headquarters are in Hawthorne, California. However it also employs workers at its facilities in Brevard County and in Texas.

The Times reports SpaceX is offering a minimum of eight weeks’ pay and other benefits to workers.

A SpaceX spokesperson could not confirm what locations will be impacted. In a statement, SpaceX officials said the business decision will allow the company to continue succeeding.

“To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company. Either of these developments, even when attempted separately, have bankrupted other organizations," SpaceX said in a statement.  "This means we must part ways with some talented and hardworking members of our team. We are grateful for everything they have accomplished and their commitment to SpaceX’s mission. This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.”

SpaceX makes its money through private contract launches and U.S. government contract launches for NASA and national security missions.

The company earns tens of millions of dollars per launch. SpaceX was recently valued at $30.5 billion after initiating a $500 million equity sale in December. The company also took on about $250 million in debt last year in its first loan sale, according to the Wall Street Journal.

SpaceX is getting ready to embark on its most historic achievement yet, as it prepares to test launch its astronaut spacecraft, the Crew Dragon, at Kennedy Space Center's launch pad 39A. The first uncrewed test flight was delayed due to the partial government shutdown and is slated for some time in February.

NASA awarded SpaceX and Boeing a $2.6 billion contract to develop spacecraft as part of the commercial crew program. The companies will shuttle NASA astronauts to and from the International Space Station, something that the U.S. has paid Russia to do since the shuttle program ended almost nine years ago.

The layoffs also come at a time when SpaceX will begin testing its next generation reusable rocket, Starship --designed to travel to Mars and beyond. The company is ready to begin "hop tests" of the Starship prototype in Texas.

CNN contributed to this report.

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