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Lockheed-Boeing rocket venture needs commercial orders to survive

By Andrea Shalal

WASHINGTON, May 21 (Reuters) - United Launch Alliance, a 50-50 joint venture of Lockheed Martin Corp and Boeing Co, on Thursday said it would go out of business unless it won commercial and civil satellite launch orders to offset an expected slump in U.S. military and spy launches.

ULA President Tory Bruno said the company must attract those kind of orders to remain a "viable economic entity" so it is scrambling to restructure and develop a new rocket that in seven or eight years could launch satellites twice as fast at half the current cost.

Formed by the two largest U.S. weapons makers in 2006, ULA has long been the sole company able to launch U.S. military and intelligence satellites into orbit. It will face competition for the first time when the Air Force expects to certify a rival, privately held Space Exploration Technologies, to bid on some of those launches. That certification is expected next month.

ULA is also under pressure from a federal ban on use for national security launches after 2019 of the Russian RD-180 rocket engines that power its Atlas 5 rockets. Congress passed the law after Russia annexed the Crimea region of Ukraine.

Bruno said the number of U.S. military and intelligence satellite launches would likely drop in coming years to about five launches a year from 10 to 12, with the smaller number to be split among two or more rivals.

"We have to ... access commercial and civil opportunities. (We) cannot survive on two launches a year," Bruno told a lunch meeting hosted by the Washington Space Business Roundtable.

Bruno last week announced a 30-percent cut in management as part of the restructuring.

On Thursday he said Boeing and Lockheed were still approving investment in the new Vulcan rocket only one quarter at a time given uncertainty about how Russian engines the company can use to compete for national security launches.

He said the Air Force had a strong argument to request a Pentagon waiver if Congress continues to block use of Russian engines ordered but not paid for before the Crimea invasion.

Barring a waiver or change in the current law, ULA would only be able to compete for five Air Force launches between 2019 and 2022, when the new rocket is expected to be certified. ULA says its other rocket, the Delta 4, costs too much to compete.

"We must have access to the Atlas as a competitive platform until we have the replacement rocket engine. There really is no Plan B," he said.

(Reporting by Andrea Shalal; Editing by David Gregorio)