Boeing's Delta IV Rocket Hits Snags;
Air Force May Pick Rival for Launch
By ANDY PASZTOR
Staff Reporter of THE WALL STREET JOURNAL
Boeing Co.'s leading rocket program, the Delta IV, is facing problems on two
fronts: The Air Force is threatening to choose rival Lockheed Martin Corp.
for an important launch next year, and a further slump in the commercial
market is undermining the project's profitability.
Engineering problems with the rocket's main engine are causing the Air Force
to consider scratching plans to put the initial government payload aboard a
Delta IV in the first half of 2002, according to industry and government
officials. Although no final decision has been made, the service has taken the
preliminary steps necessary to allow it to give the launch to Lockheed. If the
Air Force finally decides to use a Lockheed rocket, it would be an important
symbolic blow to one of Boeing's highest-visibility space initiatives and could
set the stage for denying the company future government-launch business.
The Lockheed team "is closer to meeting Air Force certification" for the first
government flight than Boeing, according to Gen. Eugene Tattini, head of the
Air Force's Space and Missile Systems Center, which is in charge of the new
generation of more-efficient, multipurpose launchers each company is
developing. If Boeing were ahead of schedule "and had a commercial launch
under its belt" to test its all-new engine design, he said in a recent interview,
then Air Force brass "would be feeling a lot better" about plans for the May
2002 blastoff.
Lockheed has basically completed all engine tests on its latest competing line
of Atlas launchers, and they are considered a less-risky choice, because
nearly all of the parts have flown on earlier rockets.
Meanwhile, an escalating falloff in commercial satellite launches has further
reduced revenue projections for Boeing's family of Delta launchers over the
next few years. That sharp slowdown in launches of low-Earth-orbit satellites
means Boeing will find it difficult to meet its payback projections on the
rocket, which has so far cost at least $2 billion.
Long before the latest difficulties, market changes prompted both Boeing and
Lockheed to slash their projections for annual satellite launches nearly in half
from what they were in the late 1990s. But in just the past few weeks the
outlook has become even gloomier. Launches of more than 90 additional
satellites have been postponed by senior executives of two prominent satellite
projects: SkyBridge LP, spearheaded by Alcatel SA of France, and
ICO-Teledesic Global Ltd., backed by cellular-phone billionaire Craig
McCaw and others. As many as 40 of those satellites were slated to go atop
Delta rockets, while some of the others were scheduled with Lockheed.
As a result of these and other negative developments in the launch business,
Boeing has been forced to stretch out the anticipated payback for the Delta
IV, a project in which the company has invested at least $1.5 billion and the
Pentagon an additional $500 million, according to industry officials and Wall
Street analysts.
Gale Schluter, a top Boeing executive overseeing the Delta IV, acknowledged
in an interview that "we have used up all the slack in our schedule" and the Air
Force "has been less optimistic" than company officials about the likelihood of
meeting the 2002 launch commitment. As a result, he said, the military is
"looking at risk-mitigation options," including possibly reassigning the initial
launch to Lockheed. The deliberations come after a string of much-publicized
rocket failures affecting both Boeing and Lockheed in 1998 and 1999.
As for the Delta IV, Mr. Schluter said Boeing is confident it has resolved the
performance problems that plagued its new RS-68 engine design and the
company always "had a very reasonable reserve" in its business plan for such
difficulties. Even as global demand for launches continues to slide, he said,
"we are going to have the lowest [rocket-manufacturing costs] in the world"
and that will put Boeing "in a competitive position" to attract customers.
Boeing's problems with the Air Force are a far cry from its situation a few
years ago, when it beat out Lockheed to grab the bulk of the government
launches envisioned under the Air Force's evolved expendable launch vehicle
program, known as EELV. The Delta IV, Boeing's most advanced and potent
vehicle developed under the EELV umbrella, was designed to hurl as much as
14 tons into high-Earth orbit at a 25% lower cost than its predecessors.
Less-powerful variants are designed to carry out commercial missions.
The giant aerospace company built an expensive new assembly facility in
Alabama and upgraded launch facilities in California and Florida, all with the
goal of cutting assembly costs and launch-pad preparation time. By late 1999,
Boeing boasted it had more than $4 billion of commercial Delta IV launches
on its books.
Lockheed, based in Bethesda, Md., took a safer, more evolutionary
approach. So far, the Air Force has given the green light to all but Lockheed's
heaviest-lift rocket versions. "We're hitting all the milestones," said Al Smith,
executive vice president of Lockheed's space operations.
Air Force Col. Robert Saxer, the EELV program manager, said that from the
beginning the Air Force "was never as optimistic as industry in projecting the
number" of likely launch customers.
Seattle-based Boeing has struggled with a string of setbacks. Vibrations
forced a redesign of a pump that supplies fuel and oxygen for the RS-68
engine. And despite many months of intense searching, company officials said
they still haven't signed a commercial customer for the Delta IV's very first
blastoff, scheduled for the first quarter of next year.
"It's really a buyer's market," James Albaugh, head of Boeing's Space &
Communications Group, said last year. "Everybody is reluctant to be the first
... to ride a new launch vehicle."
Asked when the Pentagon will decide about its backup for the prestigious first
Air Force EELV launch, Gen. Tattini said: "From an ultraconservative
perspective, we should have made that decision yesterday." |
