Orbital Sciences has increased by 50 percent the annual revenue and launch rate it expects from its Taurus 2 rocket based on additional business expected in carrying supplies to the international space station, Orbital Chief Executive David W. Thompson said April 17. The new estimate is four to five
launches per year and $300 million in annual revenue
starting in 2012 or 2013.


Taurus 2 is scheduled to make its first flight in late 2010.


Orbital will decide within a month whether Florida’s Cape Canaveral Air Force Station, Fla., or NASA’s Wallops Space Flight Facility in Virginia will be Taurus 2’s launch base. Both states have made attractive offers that Thompson said could result in a net savings for Orbital on Taurus 2 costs compared to the company’s original estimates.

Thompson said the AJ-26 liquid-fueled first-stage engine, provided by Aerojet of Sacramento, Calif., and based on the Russian
NK-33 engines that Aerojet purchased in the 1990s, is one of the technical challenges in
the Taurus 2 program. This engine will be fitted onto a first stage whose structure and fuel tanks are being built by Yuzhnoye and Yuzhmash of Ukraine, one of the principal builders of the Zenit vehicle used by Sea Launch Co. of Long Beach, Calif.

Using the Aerojet-provided AJ-26 engines allows Orbital to avoid development of a new engine for Taurus 2.


“The heritage of these Russian engines goes back a long way, and of course the first stage is being developed by an outstanding team over in the Ukraine,” Orbital Chief Operating Officer J.R. Thompson said during the call. “It is going to require all of our people to pay an awful lot of attention to detail as we integrate here these systems – one from offshore and one from the West Coast.”


In a conference call reporting the Dulles, Va.-based company’s financial results, David Thompson also said Orbital is more optimistic than previously
about its likely success this year in the commercial telecommunications satellite market.


The company has booked one order so far
– a contract option exercised by SES Americom – and recently signed a second order that it has not yet announced, David Thompson said. David Thompson said the current market environment makes it more likely that Orbital could win four geostationary commercial telecommunications satellites this year. “We’re certainly confident of three orders, which was our original plan,” he said.


Building military satellites for the U.S. government continues to be a promising market for Orbital, while the market for government science and Earth observation spacecraft is less visible, he said.


Orbital Chief Financial Officer Garrett E. Pierce said during the call that Orbital’s space systems division, which includes the commercial satellite line, had increased its operating-profit margin in the three months ending March 31 to 7.4 percent from 6.6 percent a year ago, mainly because of higher business volume and cost reductions the company has put into place.


Not all commercial satellite builders publish clear data on satellite profitability, so comparisons are difficult. But in the past couple of years Orbital’s margins appear to be among the highest.


Pierce said the sale of Orbital’s Transportation Management Systems division to Affiliated Computer Services Inc. for $42.5 million, which was announced April 17, will provide Orbital with additional cash that can be put to use for research and development expenditures, including work on Taurus 2.


David Thompson said Orbital’s $171 million contract with NASA under the agency’s Commercial Orbital Transportation Services (COTS) program has accelerated Taurus 2 decision-making inside Orbital and given the company increased confidence of the vehicle’s prospects for generating revenue.
COTS is designed to give NASA a private-sector supplier of launch and cargo-supply systems to serve the international space station after the space shuttle’s retirement around 2010.


Orbital reported sharp increases in revenue
and profit for the three months ending March 31 compared to the same period a year earlier. Revenue was up 30 percent, to $296 million. Operating income, at $21.6 million, was up 23 percent. Net income increased 19 percent, to $13.7 million.