Many Questions Left Unanswered

By Nick Mitsis

As we were going to press, the two largest U.S. military contractors, Boeing Co. and Lockheed Martin Corp., announced the formation of a joint venture, United Launch Alliance, which combines their once competitive rockets into one family to provide launch services for the U.S. Air Force and the National Aeronautics and Space Administration. While this arrangement would eliminate competition for the heaviest U.S. government launches, all reports to date spin this news as a win-win for both vendor and client. The companies clam this venture has the potential to save the U.S. government as much as $150 million a year and produce better production and launch efficiencies for both the Boeing Delta 4 and Lockheed Martin Atlas 5 rockets. But this alliance certainly is sparking more questions than answers about the specific long-term impacts to the launch services business.

Boeing’s and Lockheed Martin’s follow through is the key to this arrangement. All that has been addressed so far is how they will merge their administrative and manufacturing operations, but no specific business-related plans have been revealed, leaving questions unanswered, such as:

• What role will International Launch Services, as the current marketing arm for Lockheed’s Atlas 5 rockets, play in this new venture?
• Will the production efficiencies expected under this new joint venture be efficient enough to make the Delta 4 a viable option on the commercial market again and will the Atlas 5 also be able to benefit from lower production costs?
• With the government launches, and their subsequent revenue streams, removed from Boeing’s and Lockheed Martin’s current launch businesses, what will the realistic expectations for solely commercial launch units be going forward given the current state of the market?
• Will the creation of United Launch Alliance even be approved by U.S. and European Union regulators?

Boeing and Lockheed Martin have also announced there would be layoffs associated with the creation of United Launch Services, though no details have yet been released. All eyes, and many U.S. politicians, will undoubtedly be focused on what this will mean for production workers in Denver and launch crews at Vandenberg Air Force Base, CA, and Cape Canaveral Air Force Station, FL.

In the current market that continues to yield some of the lowest commercial launch rates in its history, government launches continue to pay most of the bills for these launch services units. While United Launch Services certainly will bring in the money, time will tell how Boeing and Lockheed Martin will approach their commercial launch services businesses so they too can continue to thrive during these changing times.

We at Via Satellite are also undergoing some changes. As many of you already know, we have expanded our editorial team and our conferences.

It is with great pleasure that I am able to introduce our new assistant editor, Jason Bates. With more than eight years covering the aerospace industry, Jason’s business enthusiasm, industry reputation and solid reporting skills make him a top-notch addition to our staff. He can be reached at [email protected].

Lastly, we are proud to bring to you SATELLITE EMEA 2005. The conference and exhibition will be held 6-9 of November in Rome, Italy. More details will follow, but for conference information, visit http://www.SATELLITEEMEA.com. For exhibit information, contact Scott Dickson at [email protected].