Boeing, Lockheed Refile Joint-Venture Proposal

by












  Space News Business

Boeing, Lockheed Refile Joint-Venture Proposal

By SPACE NEWS STAFF REPORT

posted: 26 September 2005
12:46 pm ET


PRIVATE stylefile:c:!temp!~pr00000a140001001150de000.STY PRIVATE stylefile:c:!temp!~pr00000a140001001150de000.STY PRIVATE stylefile:c:!temp!~pr00000a140001001150de000.STY Officials with Boeing and Lockheed Martin minimized U.S. government concerns that prompted the companies to refile their request for permission to form a joint venture in launch vehicle manufacturing.

These officials said U.S. government authorities are seeking clarifications on the cost-saving aspects of the joint venture as well as its financial stability.

Boeing and Lockheed Martin withdrew their Aug. 22 filing with the U.S. Federal Trade Commission (FTC) to create United Launch Alliance LLC Sept. 21. The companies submitted a more detailed filing Sept. 23, restarting the 30-day clock by which U.S. antitrust and other authorities review merger proposals, Lockheed Martin spokesman Tom Jurkowsky said.

Officials from both companies said U.S. government authorities have voiced no objections to the merger, which would combine under one roof production of Boeing’s Delta 4 and Lockheed Martin’s Atlas 5 rockets. The companies have said the merger will save the U.S. government $100 million to $150 million per year while maintaining separate launch capabilities to ensure U.S. access to space.

Speaking at a Banc of America investors conference in San Francisco Sept. 20, James Bell, chief financial officer of Chicago-based Boeing, said he expects United Launch Alliance to receive U.S. regulatory approval this year. The government’s questions, Bell said, mainly have to do with “the financial stability of the joint venture, and making sure that the parents will support it, and … what kind of savings we expect will be of benefit to [the U.S. government] coming out of this combination. There is nothing I see that is a show-stopper, nothing that would preclude us from getting this done … sometime this year.”

At the same conference, G. Thomas Marsh, executive vice president of Lockheed Martin Space Systems of Denver, repeated assertions that United Launch Alliance would save between $100 million and $150 million per year over the current competitive structure with separate Atlas and Delta production lines.

George Muellner, senior vice president of Air Force systems under Boeing Integrated Defense Systems which is based in St. Louis, told reporters in Washington Sept. 13 that military officials had asked for more data on the cost savings from combining the rocket production operations. The companies initially were asked to provide data on the cost savings that could result from combining launch range support staffs, he said.

Ronald Sega, undersecretary of the U.S. Air Force, said during a brief discussion with reporters in Washington Sept. 22 that “a lot of work” still has to be done regarding the approval process, and declined to comment further.

“I don’t know what they are discussing at this point, but it’s important to go through the details — it’s a big deal,” Sega said.

John Mayo, professor of economics, business and public policy at the Georgetown University in Washington, said refiling merger proposals is not unusual and that Boeing and Lockheed Martin probably are seeking to avoid the more cumbersome process of responding to a formal FTC request for more information. “My guess is what’s going on here is that the companies may have been quick out of the barn to start with this and they now have said, ‘Well, wait a minute here, we might make life easier on ourselves if we listen carefully to the concerns being raised in an informal way,'” Mayo said.

Comments: Warren Ferster, wferster@space.com