Lockheed Martin earnings down due to its commercial space divisions

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Capitalism in space: Lockheed Martin’s third quarter earnings were down by one percent, partly due to reduced earnings in its commercial space divisions.

While other factors contributed to the drop in earnings, this quote highlights an important detail about the competition in the launch industry:

Reduced profits from Centennial-based rocketmaker United Launch Alliance caused some of LMSS’ decline, the company said. ULA is a joint venture of Lockheed Martin and Boeing Co. LMSS’ share of ULA’s launch-business profits dropped by $20 million to $45 million in the third quarter, the company said.

ULA’s profits dropped by one-third, which suggests that they are continuing to lose business to SpaceX because of its lower launch prices.



  • mkent

    ULA is not yet losing business to SpaceX. What is happening is that ULA had 15 launches planned for this year, but six of those government payloads are delayed so much that their launches got pushed into next year.

    And this precisely demonstrates the purpose of the ULA’s ELC contract. ULA now has production facilities, suppliers, and launch facilities all sitting idle waiting for their government payloads. In addition to being a large direct expense, it also represents a billion dollars worth of capital tied up waiting. The government knows this is expensive, but it wants ULA to be ready to go when the payloads are finally ready. It wants them to wait. Hence, the ELC contract.

    BTW, there is another factor contributing to the reduced revenue available to Lockheed and Boeing: ULA is taking more of its launch profits and investing them in Vulcan instead of returning them to the parents. Vulcan is due to hit CDR in December, if I remember correctly.

  • mkent: All excellent points, many of which I actually made in my podcast with Batchelor. We will not really know if ULA is losing business to SpaceX for at least a few more years, and my guess is that the company will hold its own. SpaceX is really stealing market share mostly from the Russians, and a little from ArianeGroup.

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