Orbital ATK Sees Commercial Satellites as Top Growth Area

by

PARIS — Satellite and rocket builder Orbital ATK on May 28 said its commercial geostationary-orbit satellite business is showing accelerated revenue and profitability as the company hits its stride with a higher-power product.

The company said it is on track to start launches of its Antares rocket — whose October failure accelerated Orbital’s plans to replace the rocket’s Russian-made main engine — with a new Russian engine in March.

In a conference call with investors, Orbital Chief Executive David W. Thompson said the new RD-181 engine from Russia’s Energomash has successfully conducted seven certification firings, “all of which went as expected.”

The first two flight models — two are used for each Antares main stage — are now in final tests and will be delivered to Orbital in early July. Engine-related modifications to the Antares first stage are on schedule, he said, and post-failure repairs to the Mid-Atlantic Regional Spaceport at NASA’s Wallops Flight Facility in Wallops Island, Virginia, are on track for completion in September.

Thompson did not address whether the company would need to invest its own funds to complete the repairs.

Full system tests of the re-engined Antares would be conducted late this year and into January under the current schedule, with a late-March inaugural flight. Orbital has said that it likely will proceed directly with the launch of a cargo capsule to the International Space Station under its Commercial Resupply Services (CRS) contract with NASA without conducting a demonstration flight.

David Thompson
“We believe there are four bidders still in the running” for the CRS-2 contract, Orbital Chief Executive David W. Thompson said. “We continue to feel optimistic about our position.” Credit: OrbitalATK

Thompson said the late-March flight schedule includes one month of schedule margin, meaning unforeseen delays in the program could slow progress by up to a month without affecting the March date.

Orbital is competing for NASA’s follow-on CRS-2 contract. Thompson said he expected NASA to issue a call for best and final offers by late June, with winners announced in late September.

“We believe there are four bidders still in the running” for the CRS-2 contract, Thompson said. “We continue to feel optimistic about our position.”

Five bidders started out the CRS-2 competition. An industry official said Lockheed Martin Space Systems is no longer in the bidding.

Orbital apparently has felt little or no pressure from the U.S. Congress about its choice of a Russian engine, despite congressional demand that United Launch Alliance of Denver phase out its use of a Russian engine to power the company’s Atlas 5 rocket, which launches U.S. military payloads.

Orbital has contracted with ULA for an Atlas 5 launch of an Orbital CRS mission to maintain its CRS cargo delivery schedule with NASA while the new Antares is being fitted with new engines.

A Lockheed Martin official said the Atlas 5 flight for Orbital is scheduled for November or December.

Thompson said the company has not yet revised its expected CRS operating profit forecast but may revise it upward later this year. Orbital has said the October failure, which destroyed a Cygnus space station cargo freighter, will have no material effect on CRS profitability or revenue because from now on it will be launching larger Cygnus cargo modules, allowing it to fulfill its CRS contract obligation — measured in delivered kilograms — with fewer launches.

Antares fail
The October failure of an Antares rocket accelerated Orbital ATK’s plans to replace the rocket’s Russian-made main engine. Credit: NASA video capture

Dulles, Virginia-based Orbital specializes in smaller telecommunications satellites generating 8 kilowatts or less of onboard power. The company’s GeoStar-3 satellite platform was introduced in mid-2014.

Orbital has booked two commercial satellite orders so far in 2015, both GeoStar-3 models. One is to SES of Luxembourg. Thompson declined to name the second order, booked in mid-May, but industry officials said it is likely the BSAT-4A satellite for Broadcast Satellite System Corp. of Japan.

The company is optimistic about its chances of winning another one or two contracts this year given what it knows about current and prospective satellite operator bid requests.

Commercial satellite operating profit is accelerating as Orbital finds its production rhythm for the GeoStar-3 and reduces satellite production time.

The Orbital-built SkyM-1 satellite launched May 27 for DirecTV Group of El Segundo, California, was a GeoStar-2 frame. Instead of the 24 months expected, it was delivered 20 months after the contract signature, helping boost the profit margin.

Thompson said Orbital ATK expects the commercial satellite division to be the star performer in the company’s 2015 financial performance.

“There are several [divisions] that are expected to grow [revenue by] more than $100 million this year,” Thompson said. “At the top of the list would be commercial satellites. This unit should be up well in excess of $100 million in revenue this year compared to last year.”