Aerojet-Rocketdyne Offers $2 Billion for ULA

The RD-180, A great Engine but a Problem Child

The RD-180, A great Engine but a Problem Child

According to Reuters, Aerojet-Rocketdyne Holdings Inc. has made an offer to purchase United Launch Alliance from parent companies Boeing and Lockheed Martin for approximately $2 billion in a deal which could achieve preliminary agreement as early as next week.

The deal would mark a major shakeup and yet another consolidation in the traditional, or “OldSpace” aerospace industry as it attempts to compete against price pressure being brought by SpaceX and the self inflicted political vulnerability of relying on Russian engines for access to orbit. It would also raise questions regarding the future direction of aspiring NewSpace leader Blue Origin, which is expected to make its own major announcement next week regarding a manufacturing and launch facility in Florida.

At the heart of the issue lies the RD-180 rocket engine which powers the Atlas V. A technologically brilliant staged combustion rocket engine with a flawless performance record and very low acquisition cost, the RD-180 became politically toxic after the Russian invasion and annexation of the Crimea, resulting in a ban of further imports for DoD launches beyond a limited number already in process.

Combined with pricing pressure from SpaceX, which earlier this year achieved certification to offer its much lower cost Falcon 9 for DOD business which comprises most of ULA’s income, the 50-50 Boeing Lockheed Martin joint venture found itself facing a perfect storm, with the only safe harbor a new engine for the Atlas V, or new booster entirely. After considering a proposal from Aerojet-Rocktdyne for its yet to be developed AR-1, a closer substitute for the RD-180, ULA elected to take the latter route and announced the Vulcan booster. For those who had been hoping ULA would eventually rise to the challenge posed by SpaceX, it was perceived as much needed step in the right direction.

As introduced, the Vulcan is a next generation, methane fueled rocket with first stage BE-4 engines supplied by Blue Origin, an evolving cryogenic upper stage and a path towards partial reusability.  The announcement marked a major change for ULA, and potentially devastating one for Aerojet, which was essentially being told that despite its long history, the future lay elsewhere. On the chopping block were not only the AR-1, but the RS-68 engine which powers the even less competitive Delta IV, and potentially, the RL-10 which powers the upper stage of Atlas, Delta and initially, the Vulcan as well. In an interview with Aviation Week, ULA’s refreshingly candid CEO Tory Bruno assessed Aerojet’s assertion that it could have an AR-1 ready by 2018 as “ridiculous.”

Aerojet’s lack of competitive solutions was then further underscored when the Orbital ATK selected another variant of the Russian RD family as it sought to replace the 40 year old Russian NK-33 rocket engines re-manufactured by Aerojet as the AJ-26, which were implicated in the failure of an Antares rocket last October.

Rebuffed, Aerojet then sought to re-enter the game through the somewhat curious means of investigating whether or not ULA and Lockheed Martin actually owned the intellectual property for the Atlas V, which was partially funded with taxpayer dollars. Not surprisingly, they did.

The matter might have been considered closed except for the fact that only weeks after ULA introduced the Vulcan to great fanfare, its parent companies had effectively undercut the seriousness of the venture by announcing that it would only be funded on a quarterly basis, hardly an encouraging sign. That announcement could only be taken as a signal that despite years of healthy contribution to their respective bottom lines, defense giants Boeing and Lockheed Martin were now ambivalent regarding the future prospects for a joint venture which began as more of a shotgun marriage.

Is a mere $2 billion enough for a company which never forgets to remind us that it launches multi-billion dollar payloads on a regular basis enough smooth the pain of a divorce? It seems we will soon find out.

 

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2 Comments on "Aerojet-Rocketdyne Offers $2 Billion for ULA"

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  1. Aerojet-Rocketdyne has absolutely no choice but to attempt to purchase the ULA.

    The ULA’s intention to replace both the Atlas V and the Delta IV heavy with the Vulcan would mean that Rocketdyne would have no customers for its future AR-1 rocket engine and also no customers for its current RS-68 engines.

    And how long would it be before Blue Origin also attempted to replace the ULA’s use of RL-10s with the BE-3.

    And who knows when, if ever, NASA will ask Rocketdyne to start producing new RS-25 engines for the SLS program.

    The company’s future is in peril from all directions. And they have to make a decisive move!

    Marcel

  2. Zed_WEASEL says:

    Waiting for Jeff Bezos to make a counter bid. A paltry $2B for ULA is low balling the bid.

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