Boeing and SpaceX Secure $6.2B NASA Space Taxi Contract
National Aeronautics and Space Administration or NASA has selected The Boeing Co. (BA) and Elon Musk's Space Exploration Technologies Corp., or SpaceX, to transport U.S. crews to and from the International Space Station or ISS. The contracts, worth $6.8 billion in total, strive to end the nation's sole reliance on Russia.
Boeing is to receive a $4.2 billion contract from the government while SpaceX has been awarded a $2.6 billion contract. Although NASA did not divulge details relating to the contracts it however maintained that both companies would have to meet safety and operating standards. The space taxi is slated to transport its first astronaut to the orbiting laboratory by 2017. NASA’s selection of two contractors will prompt competition, cut overall technical risk and keep a lid on prices.
Since the retirement of the space shuttle fleet in Jul 2011, the U.S. agency has relied upon Russian space agency for the transportation of its astronauts to the ISS at a cost of up to $71 million per seat on Russian Soyuz capsules. Hence, the restarting of U.S. manned space flights aims at keeping the cost of U.S. space launches down and also marks "the most ambitious and exciting chapter in the history of NASA and human space flight" as per NASA Administrator Charles Bolden.
Built by United Launch Alliance − a Boeing and Lockheed Martin Corp. (LMT) partnership − Boeing's CST-100 spaceship would launch aboard Atlas 5 rockets. SpaceX has plans to upgrade its Dragon freighter to carry astronauts. Both the contractors will retain ownership of their vehicles and can use those commercially, including ferrying private tourists.
Given the mounting tensions between the U.S. and Russia over the latter’s annexation of Crimea and support for rebels in eastern Ukraine, the latest move by the U.S. to reinitiate manned space flight has taken on a fresh urgency. It is worth mentioning that Boeing’s CST-100 designed to travel into space aboard Atlas V rockets is powered by Russian-made RD-180 engines.
Boeing is however teaming up with Lockheed Martin and Blue Origin, founded by Amazon.com Inc.'s (AMZN) Jeff Bezos, to build a new rocket engine. This will be a standby in case the RD-180 engine supply is disrupted.
Since 2010, NASA has already invested about $1.5 billion in partner companies under its Commercial Crew program. Boeing and SpaceX were fortunate to snag most of NASA's development funds.
Boeing’s Defense, Space & Security division is one of the world's largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions. It is the world's largest and most versatile manufacturer of military aircraft.
The U.S. has in recent times stepped up its space program and the defense contractors specializing in space systems see a lot of opportunity here in the wake of dwindling offers from other core defense areas. In July, Boeing secured a sizable contract from NASA to develop the core stage of the largest ever Space Launch System (:SLS) rocket. After completing the Critical Design Review (CDR) on the core stage, Boeing finalized a $2.8 billion contract with the space agency to enter into full production.
Boeing carries a Zacks Rank #2 (Buy). Investors interested in the aerospace and defense industry may also consider Air Industries Group (AIRI), carrying a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on BA
Read the Full Research Report on AMZN
Read the Full Research Report on LMT
Read the Full Research Report on AIRI
Zacks Investment Research
