Vulcan rocket’s space debut will be crucial for Boeing-Lockheed venture as sale talks loom

By Joey Roulette

WASHINGTON (Reuters) -A lot is riding on the first launch of the new Vulcan rocket by the United Launch Alliance, a joint venture of Boeing (NYSE:) and Lockheed Martin (NYSE:).

A successful launch at Cape Canaveral next week would allow ULA to fulfill a deep backlog of missions worth hundreds of millions of dollars and establish a greater competitive footing with Elon Musk’s SpaceX.

And it could prove vital to plans by the two U.S. aerospace firms to sell their joint venture.

“It’s a very nervous time for them,” said George Sowers, ULA’s former chief scientist, who was key to Vulcan’s creation. “It’s really the future of their company.”

The debut mission is a long-awaited milestone after months of various delays in the final stretch of Vulcan’s development, and following a testing mishap last year with a Vulcan upper-stage booster. ULA CEO Tory Bruno has said that Vulcan has performed well during recent ground tests.

“That is an incredibly complicated machine, it’s tremendously powerful. Everything has to work,” Bruno said Saturday at Vulcan’s launch pad. “It is always inherently risky to fly a rocket. But what we’re good at is managing that risk.”

The mission checklist includes carrying a moon lander that is aiming to make the first U.S. lunar soft landing in half a century. The rocket will be using for the first time engines supplied by Jeff Bezos’ space firm Blue Origin.

Vulcan’s launch also comes as Boeing and Lockheed, which formed ULA in a 2006 merger of their rocket programs, are looking to sell the jointly owned venture, according to three people familiar with the talks.

The talks have been a complex, drawn-out process for which Vulcan’s launch could have crucial implications, said the sources, who asked not to be identified.

ULA declined to comment on any potential deal talks. Bruno has previously said his company could be ripe for an acquisition.

Boeing and Lockheed declined to comment.

Vulcan’s debut launch, scheduled for 2:18 a.m. ET (0718 GMT) on Monday, is the culmination of a years-long development effort sprung largely from ULA’s need to replace its current Atlas (NYSE:) V rocket. That rocket’s Russian-imported engines drew criticism from lawmakers that led to its planned retirement.

The retirement of Atlas – plus Vulcan’s other rocket, Delta – will leave the 200-foot-tall (60-m) Vulcan to handle dozens of lucrative missions and serve as the company’s sole challenger to SpaceX’s reusable Falcon 9.

Vulcan’s debut mission will send a privately built lander from space robotics firm Astrobotic to the moon. But the launch itself will also serve as the first of two certification flights required by the U.S. Space Force before Vulcan can fly Pentagon satellites.

Space Force is a core customer for Vulcan – the military branch in 2020 picked ULA’s Vulcan and its retiring Atlas V to launch 60% of the Pentagon’s missions through around 2027.

Priced lower than its predecessors at roughly $110 million per launch, Vulcan will seek to reclaim market share from Falcon 9, which is priced at roughly $62 million per launch. SpaceX’s cheaper flights have eroded ULA’s dominance of government satellite launches in the past decade.

Vulcan will also compete with Blue Origin’s forthcoming New Glenn rocket, which uses the same engines as Vulcan.

ACQUISITION TALKS

Acquisition talks for ULA have been underway for more than a year, with dozens of firms, including Blue Origin, having expressed interest, the sources said.

Blue Origin did not respond to a request for comment.

Boeing’s and Lockheed’s rationale and timing for selling ULA are unclear. But there have been significant changes to the U.S. space industry since ULA’s formation in 2006, when it was created to dominate government launches and clinch some commercial demand from the then-nascent satellite market.

Growth of the commercial market was slower than expected, said Richard McKinney, an aerospace consultant and former director of the Air Force’s space acquisition unit until 2007. “But it looks like we’re about there now.”

Amazon (NASDAQ:)’s planned Kuiper network is set to bring in crucial launch revenue for ULA. That has helped provide Vulcan with a multibillion-dollar backlog of roughly 70 missions split somewhat evenly between government and commercial customers, Bruno has said.

Vulcan’s development and ULA’s shift away from its Atlas and Delta rockets have made estimates of the company’s valuation hard to pin down, but analysts speculate it could be $2 billion to $3 billion.

Boeing and Lockheed each have their own competing space units. Lockheed, among other pursuits, has ventured into building moon rovers and made strategic investments in ABL Space, a small-launch startup with plans to build larger rockets in the future.

Boeing’s space program has struggled, primarily with its long-delayed Starliner astronaut capsule that rivals SpaceX’s more established Crew Dragon. Troubles with Starliner development have cost Boeing some $1.5 billion since 2014.

New ownership could allow ULA to innovate beyond the launch sector in ways its corporate parents were unwilling to allow, former ULA chief scientist Sowers said.

“The charter of the company was fixed, and it was very limiting,” he said. “They’re always competing and they couldn’t agree on anything. We were not allowed to innovate.”