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Orbital Gets A Needed Boost

By Staff Writer | August 18, 2003

      With waning launch demand for commercial payloads, Orbital Sciences [NYSE: ORB] is one of a number of launch service providers looking for business from the military, civilian government and scientific communities. This refocus was demonstrated last week when Orbital’s Pegasus launch vehicle boosted into orbit the SCISAT-1 scientific satellite for the National Aeronautics and Space Administration (NASA) and the Canadian Space Agency.

      Orbital Sciences’ launch vehicles, aimed at the small to medium-sized payload market, traditionally have boosted roughly equal numbers of government and commercial/non-profit payloads, said Andrea Maleter, technical director at the Futron Corp., a Bethesda, Md.-based consulting firm. “In the last two years there has been a slight increase in the percentage of government launches – to just above 60 percent — which reflects the more active government market in this period,” Maleter said.

      The vast majority of Orbital’s commercial satellite missions on the Pegasus rocket were conducted for the company’s former affiliates, satellite communications firm Orbcomm and satellite imagery firm Orbimage, according to Futron.

      With Orbimage and Orbcomm slipping into bankruptcy and under the control of new owners, Orbital should not be expected to gain as much additional business from these companies now that their initial deployment of satellites has been carried out. Orbcomm is trying to survive and grow after leaving Chapter 11-bankruptcy court protection, while Orbimage is preparing to emerge from bankruptcy court protection soon.

      An even more pronounced shift has been occurring among the companies that provide launch services for large payloads. For example, Boeing [NYSE: BA] last month opted to cease marketing its Delta IV as a commercial satellite launcher and focus exclusively on government business.

      “There is just not a demand for commercial launch services right now,” said David Logsdon, executive director of the U.S. Chamber of Commerce’s Space Enterprise Council. “Light-load launch providers are going where the business is. The business right now is in the government sector.”

      By reorienting from commercial to government and military programs, Orbital is making a “wise decision” to pick up more profitable programs, said Roger Rusch, who heads the TelAstra consulting firm in Palos Verdes, Calif.

      “Most of the reports of slim profit margins … come from the highly competitive commercial sector,” Rusch said. “Government space programs are a different matter and frequently provide return on sales and return on investment that are quite respectable. Certainly, the major aerospace companies in the U.S. — Boeing, Northrop Grumman [NYSE: NOC], Raytheon [Nasdaq: RTN] and Lockheed Martin [Nasdaq: LMT] — have recognized this for a long time. These companies tend to avoid commercial space business because of the low profits.” Orbital has made an understandable shift in its business strategy, Rusch said.

      Last week’s mission from Vandenberg Air Force Base, Calif., carried the 330-pound SCISAT-1 spacecraft into its targeted orbit approximately 400 miles above the Earth at an inclination of 73.9 degrees to the equator. The powered flight sequence for the SCISAT-1 mission took about 11 minutes, beginning from the time the Pegasus rocket was released from its L-1011 carrier aircraft at approximately 10:10 p.m. EDT to when the satellite was deployed into orbit. The mission was the 35th for the Pegasus rocket and its 21st consecutive successful launch.

      Pegasus is a launch system that deploys small satellites into low-Earth orbit. The launcher uses a patented air-launch system in which the rocket is launched from beneath Orbital’s Stargazer L-1011 aircraft over the ocean to cut costs and provide customers with flexibility to operate from virtually anywhere on Earth with minimal ground support requirements.

      Pegasus is the only small launch vehicle to have earned NASA’s Category 3 certification, which allows the U.S. agency to launch its most valuable payloads aboard the rocket.

      –Paul Dykewicz

      (Barron Beneski, Orbital Sciences, 703/406-5000; Andrea Maleter, Futron Corp., 301/347-3450; David Logsdon, U.S. Chamber of Commerce’s Space Enterprise Council, 202/463-5479; Roger Rusch, TelAstra, 310/373-1925)