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Buoyed by Antares Success, Orbital Sciences in Hot Pursuit of Commercial Launch Contracts

The Antares rocket’s success in its first two NASA-funded demonstration flights has begun to draw interest from commercial and non-NASA government customers, according to Orbital Sciences Chief Executive David W. Thompson. Credit: NASA photo

PARIS — Satellite and rocket hardware manufacturer Orbital Sciences on Oct. 17 said that its new Antares rocket’s success in its first two NASA-funded demonstration flights has begun to draw interest from commercial and non-NASA government customers.

In a conference call with investors, Orbital Chief Executive David W. Thompson said the company is already chasing one commercial customer for a one- or two-launch contract to be conducted starting in 2016.

Thompson did not identify the customer or the type of orbit, but said Orbital would be submitting a contract proposal in the coming weeks. A contract decision is likely in the first three months of 2014, he said.

“With two really good launches under our belt, things are picking up in terms of customer interest,” Thompson said of Antares, whose first two flights — one delivering a cargo module to the international space station — were conducted for NASA.

A third flight, and the second carrying the Cygnus space station freighter, is scheduled for December. It will be the first delivery on an eight-launch contract with NASA for station resupply, with the second and third of these flights to occur in the spring and autumn of 2014.

The first Cygnus demonstration flight to the station carried about 682 kilograms of payload. The second will carry double that amount, with future flights increasing their payload complement. Under the $1.9 billion Commercial Resupply Services, or CRS, contract, Orbital is obligated to deliver 20,000 kilograms of supplies to the station over the eight flights.

Clearly basking in the glow of the first two Antares successes, Thompson said the eight CRS launches are likely to be completed by the end of 2016. Orbital expects NASA to move out on a CRS follow-on contract sometime in 2014.

The partners in the space station — the United States, Russia, Japan, Europe and Canada — have agreed to maintain the orbital outpost until 2020 at least. They are talking about an extension to 2027 or 2028 pending an assessment of what hardware would need to be replaced, or recertified for further use beyond 2020.

Until the recent Antares successes, Orbital officials had been circumspect about Antares’ market beyond NASA. Thompson said that for the next few years the main non-NASA customer will almost certainly be other U.S. government agencies.

Thompson made no mention during the call of Orbital’s ongoing attempts to secure a supply of Antares first-stage engines, whether by restarting production of the Russian AJ-26 engines, purchased through Aerojet Rocketdyne for use on Antares, or finding an alternative.

In the past, Orbital officials have said the supply of refurbished, or refurbishable, AJ-26 engines was limited and that the company would need to settle on a long-term solution by mid-2014. Orbital has said it has enough of the current-generation AJ-26 engines to complete the NASA CRS contract flights. Each Antares first stage uses two AJ-26 engines.

Orbital and Aerojet Rocketdyne have not always agreed on the number of AJ-26 engines that could be made available without restarting the Russian factory where their production ended years ago. Restarting that production line, Aerojet Rocketdyne officials have said, would not be a problem.

Dulles, Va.-based Orbital reported an 8.5 percent drop in revenue, to $989.9 million, for the nine months ending Sept. 30 compared with last year mainly because of lower revenue in its commercial geostationary telecommunications satellite business.

Thompson said late orders, and orders that were signed but late in taking effect in terms of revenue flow, in the commercial satellite segment hurt 2013’s revenue picture. 

But it did not hurt the company’s operating profit margins, which rose to 9.2 percent from 7.5 percent over the same nine-month period.

The same Satellites and Space Systems division whose revenue dropped 24 percent in the nine months ending Sept. 30 saw its operating profit margin increase to 10.5 percent from 8.1 percent.

Do not expect a repeat of the profit performance in 2014, Thompson said. What happened in 2013 was that several challenging commercial satellite contracts moved through Orbital’s factory without a hitch, allowing the company to apply reserves it had held in the event of a hiccup to be transferred to the profit line.

Orbital has also been conservative in its profit estimates under the CRS contract. But Thompson did not disagree with investors who presumed that the CRS contract would be much more profitable for Orbital than the two-launch demonstration contract with NASA that preceded it.

 
Follow Peter on Twitter: @pbdes

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