WASHINGTON — Orbital ATK expects a “go/no-go decision” by early next year on an Air Force-funded program to develop a new large launch vehicle.
In a call with analysts March 8 to discuss the company’s latest financial results, company president and chief executive Dave Thompson said the company was making good progress on initial development of a vehicle that could carry intermediate and large payloads.
“We are so far performing very well and, from everything I can tell, the Air Force likes what we are doing and where we are headed,” Thompson said. “We expect a go/no-go decision in late 2017 or an early 2018 concerning the next phase of activity to actually build and test this new launch vehicle family.”
Orbital ATK has released few details about what is known only as its “Next-Generation Launcher.” The vehicle would use solid-fuel lower stages based on space shuttle solid rocket motor segments developed by the company, as well as solid strap-on boosters. A liquid-oxygen, liquid-hydrogen upper stage would use a version of Blue Origin’s BE-3 engine that company is currently flying on its New Shepard suborbital vehicle.
The rocket’s design has at least superficial similarities to a vehicle concept called Liberty that ATK proposed prior to its merger with Orbital Sciences Corporation. Liberty, with a five-segment shuttle solid rocket booster first stage and a second stage derived from the Ariane 5 core stage provided by Astrium, was itself a commercial spinoff of the cancelled Ares 1 rocket from NASA’s Constellation program. ATK proposed Liberty for NASA’s commercial crew program but failed to win funding.
The new vehicle’s development is funded by an Air Force contract awarded in January 2016. That contract has an initial value of $46.9 million, with options to increase its total value to $180 million. Orbital ATK committed to invest at least $31 million, and as much as $124 million, into the program. The contract was part of a broader Air Force program that is also supporting work at other companies, including Aerojet Rocketdyne and SpaceX.
The upcoming decision to continue with development of the vehicle, Thompson said, would be made jointly by the Air Force and Orbital ATK. “The Air Force will have to decide on its part whether our family of vehicles is the right one or one of several that they would like to back for the long-term,” he said. “We will need to decide whether the investment case is sufficiently compelling to proceed.”
If the program continues, Thompson said he expected the split in funding would continue at current levels, with the Air Force providing two thirds of the funding and Orbital ATK one third. He also expected the Air Force to make an “early block purchase” of some of the vehicles during the program’s development.
If the Air Force elects not to continue with the program, Thompson said it’s likely Orbital ATK will scale back its work on the vehicle. “We assume it’s a go,” he said. “If not, well in 2018 then we would maybe throttle back on our investment. We definitely would throttle back on our investment.”
Commercial cargo and commercial satellites
Thompson’s comments came in a call after the company announced its financial results for the 2016 fourth quarter and full year. For all of 2016, the company reported a net income of $292.2 million on revenues of $4.455 billion, both increases from 2015.
While Orbital ATK’s overall revenue increased, that of the company’s space systems division dipped from $1.261 billion in 2015 to $1.237 billion in 2016. The company attributed the decrease to lower activity on commercial satellites.
Thompson said on the call that he expected continued weak demand for commercial geostationary communications satellites. “The downward pressure on pricing and the new additions to capacity that are in the pipeline will, at least in my view, continue to create difficult supply and demand conditions for the operators. And that will likely translate into another year of fairly weak orders,” he said.
Thompson said there was just one such satellite last year, of an estimated 14 ordered industry-wide, that Orbital ATK felt matched it class of satellites. The company bid on that and won it, he said. “Our target for the year is two awards. We probably have three fairly well defined opportunities and our plan calls for winning two of those.”
In NASA business, Thompson said Orbital ATK expected to see growing revenue this year from its follow-on commercial cargo contract, known as Commercial Resupply Services (CRS) 2. Orbital ATK won a CRS-2 contract, along with Sierra Nevada Corporation and SpaceX, in January 2016 for cargo missions to the International Space Station starting in 2019.
Thompson said Orbital ATK received its first cargo mission order under the CRS-2 contract from NASA in the fourth quarter of 2016. “We expect more clarity and hopefully more orders under CRS-2 later this year,” he said. “But for the time being, we are underway with our first CRS-2 mission.”
He noted that the company’s commercial cargo revenue is, for now, still dominated by its original CRS contract, which includes three Cygnus missions to the ISS this year — the first of which is scheduled to launch March 19 — and two in 2018. The last mission under the first CRS contract is expected in early 2019, with CRS-2 missions starting later that year.
Orbital ATK also works on a number of other NASA missions, including a variety of science missions, and Thompson acknowledged the possibility some might be affected if NASA’s budget is cut as part of broader effort by the Trump administration to reduce non-defense discretionary spending.
“We love working for NASA on these kind of programs and I’m hopeful that NASA will continue to be well supported by the administration and Congress,” he said. “And I think they will.”