Top Execs Aim For Kistler Re-Vamp

Kistler Aerospace’s board of directors boosted the bankrupt company’s efforts to raise $500 million to complete the development of a reusable launch vehicle by naming two prominent industry executives to spearhead those activities.

Will Trafton, who last week announced his departure as the top executive of launch services at The Boeing Co. [BA], unexpectedly chose to become Kirkland, Wash.-based Kistler’s president and COO in a move that allows him to team again with former Boeing Satellite Systems (BSS) President Randy Brinkley, who was named Kistler’s CEO. They will report to Dr. George Mueller, Kistler’s 86-year-old chairman, who called Trafton and Brinkley “proven leaders” in the aerospace industry.

Industry sources speculate that Trafton and Brinkley received compensation packages from Kistler that were just too enticing for them to resist. The management team also is expected to add seasoned marketing and finance executives in the near future.

Mueller, chief vehicle architect of Kistler’s K-1 Reusable Launch Vehicle, has primary responsibility for the technical aspects required to complete development of the K-1. He joined Kistler as chief executive officer in April 1995, when he also gained a seat on the board of directors.

The experience Trafton, 60, and Brinkley, 59, have in government and in the private sector, combined with their knowledge of the satellite and launch businesses, make them an “incredible addition” to the Kistler team, Mueller said in a statement. The company will attempt to capitalize on the industry leadership and experience both executives offer to help it emerge from the Chapter 11 bankruptcy court protection that Kistler sought July 15 gain relief from creditors.

Kistler is operating with debtor in possession (DIP) financing that includes an initial commitment of $4.6 million from a group of lenders led by its largest creditor, Bay Harbour Management L.C. The startup currently is operating under the supervision of the U.S. Bankruptcy Court for the Western District of

Unexpected Enthusiasm

Trafton and Brinkley voiced enthusiasm for resurrecting a bankrupt company that has what they describe as “a great technical team” and a potentially market-changing launch vehicle under development.

“It has been an exciting couple of days here,” Trafton said during an exclusive interview with Satellite News Senior Editor and Senior Analyst Paul Dykewicz. “Randy and I are pleased and proud to have been selected to the team. We have confidence this company will emerge from Chapter 11, and we hope to fly within 18 months of that happening.”

The big challenge ahead is to convince prospective investors to fund development of a potentially revolutionary launch vehicle that would enter an already crowded launch vehicle market. Kistler’s financial plight stems from events “far beyond anyone’s control,” Brinkley said.

He and Trafton cited the impact of the 9/11 terrorist attacks during 2001 as a huge blow to the satellite and telecommunications industries. In the aftermath, one major Kistler investor decided not to proceed with his investment commitment.

Once financing is obtained, the company could be ready to emerge from bankruptcy protection about three months later, he added. “I am certain that we will be successful if the remaining money can be raised,” Trafton said.

Mark Chartrand, a Baltimore-based consultant, said a number of ventures are trying to develop launchers.

Industry entrepreneurship also has been fueled by the X-Prize Foundation, which created a competition to award $10 million to the first private-sector team to build a safe and reusable space vehicle able to carry one pilot and the equivalent weight of two passengers 62 miles into sub-orbital space. The vehicle must be privately financed and safely flown twice within a two-week period. The first of 26-registered X Prize teams to complete the feat would win the $10 million prize.

“Affordability” will be a huge factor in the competition, Trafton said. Kistler’s K-1 rocket will be much lower priced than the expendable launches that are in service today, he added.

The price differential likely would be tens of millions of dollars less to launch a GEO satellite with a reusable rather than an expendable launch vehicle, industry sources said.

“People are trying new things,” Chartrand added. “I think that’s great. I can certainly understand someone trying to get out of a big bureaucracy and do something entrepreneurial.”

In Trafton’s view, the Kistler K-1 reusable rocket is going to change the “paradigm” in the launch industry. That rocket would be the advent of a relatively low-cost, low- priced option, he explained. The company intends the K-1 to become a reliable, low-cost provider of launch services for commercial, civil and military payloads destined for low- Earth-orbit (LEO), medium-Earth-orbit (MEO) and geosynchronous-Earth-orbit (GEO). The rocket’s development is about 70-percent complete, Trafton told us.

Restructuring Pain

Kistler needed to halt development work for its rocket when it no longer could pay its vendors, Trafton said. The financial hole the company is in will be an enormous obstacle to overcome, despite Kistler’s new hires. “There is no question that this will be a challenge,” Trafton said. “Randy and I wouldn’t be here if we didn’t think it could be done.”

The company’s recovery initially will involve targeting the U.S. government as a customer. As former high-level officials at the National Aeronautics and Space Administration (NASA), Trafton and Brinkley bring with them an incredible number of relationships with U.S. government officials that can be used to give Kistler a chance to win contracts. Aside from NASA, Kistler also will look for launch opportunities from the U.S. Department of Defense and the commercial market as well. One possible role for Kistler would be to complement the U.S. Space Shuttle in handling re-supply missions for the International Space Station, Trafton added.

“We think that we bring affordable, reliable vehicle that can answer the requirement to be launched on short notice,” Trafton said. The company ultimately may only need a few days notice to carry out a launch, he added.

Trafton declined to discuss specific launch prices but he expressed confidence that Kistler’s K-1 launch vehicle would be able to compete with El Segundo, Calif.-based Space Exploration Technologies (SpaceX) and other fledgling companies focused on developing reusable launchers. Kistler’s commercial spaceport is at Woomera, Australia, while it plans to construct a second launch site in Nevada.

Reuniting Colleagues

With Trafton reporting to Brinkley, the two executives are reversing roles from their days at NASA. Back then, Trafton was the agency’s associate administrator for space flight, encompassing oversight of budgeting, planning and execution of the Space Shuttle and Space Station programs, Expendable Launch Systems and the Deep Space Communications Network. He also was responsible for four NASA centers: Johnson Space Center, Kennedy Space Center, Marshall Space Flight Center, and Stennis Space Center.

Brinkley was NASA’s program manager for the International Space Station (ISS) between 1994 and 1999. While at NASA

Brinkley was responsible for integration of Russia’s participation in the ISS program and the successful on-orbit assembly of the space station’s first sections. Prior to that role, he was mission director of the Hubble Space Telescope Repair project during 1994.

“It is going to be fun to work with Randy again,” Trafton said. “We came as package.”

After heading three of the world’s major commercial launch operations, Trafton has little left to prove professionally. However, he expressed an eagerness to tackle his new challenge.

“When I look at the K-1 rocket, the product, the team that has been together at Kistler, and the prospects for the future, it was enough to make me quit thinking about playing golf and to stay in the launch business,” Trafton said. “I am not ready to retire.”

Brinkley also voiced “passion” for taking up the torch for Kistler’s product and technical team. Prior to taking the CEO post, Brinkley conducted a review of Kistler’s prospects for several months.

“I’ve reached the point in my life that I am able to do the things I really want to do,” Brinkley said. His two priorities for a job are to do something “really worthwhile” and to work with people he likes, trusts and really enjoys.

The challenge of turning Kistler into a successful launch services provider is “no crazier” than constructing the Space Station in-orbit. The latter project is up and operational, he quickly added, despite the doubts of critics.

“It is high-risk but it also is not like anything else out there,” Brinkley said. “I hope the investors will look to us as people who are knowledgeable about this industry and have a proven track record of performance. We believe in the team, the product and what it can do for the industry.”

Investors put a “lot of weight” on the management team when deciding whether to back a start-up, Brinkley acknowledged.

“We have our reputations on the line,” Brinkley said. “We believe we make a difference.”

(Will Trafton, Randy Brinkley, Kistler Aerospace, 425/889-2100; Mark Chartrand, 410/235-6932)