GenCorp Says AJ-26 Test Failure Cost Company $13.5 Million

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PARIS — GenCorp Inc., parent company of rocket-engine builder Aerojet Rocketdyne, on July 9 said the failure of an AJ-26 engine during a test firing in May cost the company $13.5 million in lost sales and higher costs for the six months ending May 31.

The incident forced Dulles, Virginia-based Orbital Sciences Corp. to delay the launch of its Antares rocket, which uses two AJ-26 engines as its first stage, to determine whether the test-stand failure indicated a wider issue with the AJ-26. The company has since cleared the AJ-26 engine now on the Antares rocket and is proceeding with the launch, carrying an unmanned cargo freighter to the international space station.

Rancho Cordova, California-based GenCorp, in a filing with the U.S. Securities and Exchange Commission, said that as of May 31 it had eight more AJ-26 engines to deliver to Orbital under its current contract.

Orbital officials have said the company is considering ATK-supplied motors and other options for Antares for the long term, but emphasize that no final decision has been made. Orbital is merging with ATK’s aerospace and defense business in a deal expected to close by the end of the year.

It is unclear whether a new Orbital-GenCorp contract for an interim supply of AJ-26 engines will be signed.

In the filing, GenCorp also said it had exercised an option to extend, by three months, the deadline by which either GenCorp or United Technologies Corp. could cancel their agreement relating to Russia’s RD-180 engine, which powers the U.S. Atlas 5 rocket used mainly for U.S. government missions.

Hartford, Connecticut-based United Technologies sold its Pratt & Whitney Rocketdyne engine division to GenCorp in a transaction announced in July 2012 and concluded in June 2013. The agreement had included the transfer to GenCorp of United Technologies’ 50 percent ownership of RD Amross, a joint venture with RD-180 manufacturer NPO Energomash of Khimki, Russia, that imports and sells the engines to Atlas 5 maker United Launch Alliance.

The transfer of the RD Amross shares has been awaiting approval by the Russian government since then, and GenCorp had reduced its purchase price of the Rocketdyne division by $55 million as a consequence. United Technologies and GenCorp agreed that either company could cancel the RD Amross transaction starting 12 months after the transaction’s closure, meaning June 12 of this year.

Either party is also permitted to extend the deadline by as much as a year, in three-month increments. GenCorp said that on May 30 it exercised the first three-month extension, to September 12.

GenCorp did not say whether the current debate about whether Atlas 5 should continue to use a Russian engine given the political tensions with Russia had changed the company’s thinking about the RD Amross purchase.

 

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