The latest Vulcan launch vehicle of United Launch Alliance (ULA), a joint venture of Boeing Company (BA.US) and Lockheed Martin Company (LMT.US), will take off for the first time on January 8, and it will definitely attract the attention of many billionaires.
The new spacecraft, built by a joint venture between Boeing and Lockheed Martin, will compete with Elon Musk's SpaceX and carry satellites and cargo for companies such as the Pentagon, NASA and even Amazon (AMZN.US).
Vulcan has also attracted takeover bids from rivals. That includes a multibillion-dollar offer from Blue Origin, the ambitious space company run by billionaire Jeff Bezos, according to people familiar with the matter. This is a critical moment for ULA. The company was once a major launch supplier to the U.S. government but has lost some of its luster in recent years. With SpaceX now leading the commercial market and partnering with the U.S. government with its reusable Falcon 9 rocket, ULA finds itself needing to adapt to avoid falling behind.
ULA was formed in 2006 by Boeing and Lockheed Martin. In its early years, the pioneering company had a "virtual monopoly on U.S. government launches," said George Sowers, the company's former chief scientist. These contracts come with additional funding to ensure that the Department of Defense can continue to access space at a time when there are few viable launch providers. But its ownership structure - consisting of two publicly traded companies competing for defense contracts - also leaves its strategy unclear.
Unlike newly launched competitors that use public and private markets to raise funds to pursue ambitious new technologies, ULA has not received an infusion of capital from investors. This has forced its CEO to keep the company's operations and staff lean. Last summer, ULA laid off about 75 people, about 40% of them launch operators at Vandenberg Space Force Base in California and about 12% at Cape Canaveral, Florida.
After recent layoffs, ULA must fly an increasingly busy flight schedule in the coming years with even fewer launch operators, a person familiar with the matter said. ULA’s headcount hovers around 2,300, while SpaceX and Blue Origin both have more than 10,000 employees, the person said.
A spinoff or sale could allow ULA to gain more capital and free itself from constraints that limit its growth. The company, which has been undergoing a formal sale process, recently launched a tender process, according to people familiar with the matter. The timing coincides with the debut of the Vulcan rocket, providing bidders a glimpse into ULA's future. According to previous reports, in addition to Blue Origin, potential buyers also include private equity giant Cerberus and aerospace manufacturer Textron Inc. .
ULA also faces price competition. In building a commercial business to complement its government work, ULA is trying to position itself as a price-competitive alternative to other suppliers. While critics have blasted ULA's rockets for their lack of reusability and relatively high launch prices - Musk has called the company a "complete waste of taxpayer money." The company's CEO did not disclose how much ULA plans to charge, but he said Vulcan's launches will be "very competitive with SpaceX."
The Space Force contracts awarded to ULA and SpaceX in October hint at the U.S. government's expectations. The contract awards ULA 11 launches with a total value of $1.3 billion, or approximately $118 million per launch. SpaceX's 10-launch deal is worth $1.23 billion, with each launch worth $123 million.
Besides price, ULA said the Vulcan's biggest advantage is that it is optimized for so-called high-energy missions, flights that require larger payloads to be brought directly to very high orbits. It's a critical moment for ULA, which has a new rocket with little room for error before committing to a busy flight schedule.