Boeing, Lockheed Close ULA Merger

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  Space News Business

Boeing, Lockheed Close ULA Merger

By JEREMY SINGER
Space News Staff Writer
posted: 07 December 2006
02:37 pm ET


BOSTON — The newly created company that combines the government launch operations of Boeing Co. and Lockheed Martin Corp. is expected to generate annual revenues of $2 billion per year in the near term, according the company’s top official.

Michael Gass, president and chief executive officer of Denver-based United Launch Alliance (ULA), said that revenue will be split evenly between the venture’s parent companies.

ULA which officially began operations Dec. 1, combines the manufacturing and government marketing of Boeing’s Delta and Lockheed Martin’s Atlas rockets. The merger is expected to save the U.S. government $100 million to $150 million annually over what it would cost to support two separate launch vehicle operations, ULA said in a news release.

Gass and Dan Collins, ULA chief operating officer, told reporters during a Dec. 1 conference call that company officials are still examining the total level of personnel reductions that are expected as a result of consolidating the launch businesses.

Gass said Lockheed Martin’s Denver area facility, which today has about 1,000 employees supporting Atlas work, likely will gain about 500 people. The work force at Boeing’s Decauter, Ala., Delta rocket factory likely will increase from about 600 people today to 700-800 as a result of the joint venture, Collins said.

Collins and Gass said there will be a net reduction in jobs, and expressed hope that this can be achieved primarily through attrition. Employees at Lockheed Martin’s Atlas facility in San Diego and Boeing’s Huntington Beach, Calif., Delta operation are being asked to relocate, and many are expected to decline.

The Atlas and Delta operations staffs at the U.S. government’s two main launch ranges at Cape Canaveral Air Force Station, Fla., and Vandenberg Air Force Base, Calif., likely will be consolidated to an as yet unspecified level , Gass and Collins said. ULA today has staff of about 780 at the Cape, and 350 at Vandenberg, Gass said.

ULA officials will look at whether facilities like machine shops and laboratories that Lockheed Martin and Boeing had operated separately at the ranges can be consolidated as well, Collins said.

While there are no plans at this time to make ULA a publicly traded company, there are no restrictions against doing so, Gass said.

ULA officials will spend the next several months conducting planning that was not allowed prior to the formal establishment of the new organization, Collins said. Full consolidation of Atlas and Delta operations likely will take about two years, he said.

A key part of that effort will be isolating ULA computer systems containing potentially sensitive Air Force payload data from the satellite manufacturing divisions of Boeing and Lockheed Martin, Collins said. The company will inform its customers before it makes any major changes in its launch operations, Collins said.

The Atlas 5 and Delta 4 were developed under the Air Force’s Evolved Expendable Launch Vehicle (EELV) program. The Air Force has begun assigning some of those launches, and Gass said service’s first Advanced Extremely High Frequency communications satellite will be launched atop an Atlas 5. The Air Force’s first two Space Based Infrared System missile-warning satellites also likely will launch atop Atlas 5 vehicles, he added.

Boeing had recently begun to negotiate Delta 4 launches with the Air Force as well, Collins said.

There has been speculation that ULA eventually will phase out either the Atlas 5 or Delta 4 to reduce its overhead costs. Air Force Lt. Gen. Mike Hamel, commander of the Space and Missile Systems Center in Los Angeles, which procures military space systems, does not want to see that happen.

“I would hope the nation would keep two families forever,” Hamel said in an interview following a speech he made Dec. 1 in Los Angeles at the Transforming Space 2006 conference. “All we have to do is recollect back to the 1980s, for example, when we had failures in a number of launch vehicles … and were grounded for some period of time…. We want to be able, if we do have some problem, to make sure we are not grounded.”

When asked if ULA should keep flying the Delta 2 rocket, which is smaller than the Delta 4 and Atlas 5 and not part of the EELV program, Hamel said now is an opportune time to look at that rocket’s future. “The Delta 2 has been a very effective workhorse on a number of missions for both NASA and DoD over time. In the context of ULA … I think there is an expectation that we can take a fresh look.”