Financial and Market Risks for Space Launch Providers

1. Space Transportation Policy and Market Risks – Space Policy Institute November 16, 2011 – George Washington University Financial and Market Risks for Space Launch Providers Presented by: Charlie Precourt ATK Aerospace Systems www.atk.com

2. Overarching Considerations for Launchers • Physics Very Challenging and Unchanging • Operating environments extreme. Temperatures, loads, pressures, and rapid variations of these conditions lead to highly costly systems solutions. • Dramatic Advances in propulsion and materials properties elusive, yet necessary to dramatically lower the costs of “managing the physics” • Market Relatively Small • Flight rates much greater than six per year are rarely achieved for any sizable launch system • Difficult to recoup development costs, resulting in high unit cost in proportion and infrastructure carrying costs high on a per flight basis • Managing market risks exacerbates business model: flight losses, indemnification, payload or system delays/stand-downs, manifesting challenges Broad set of mission requirements – Attributes sought often mutually exclusive • LEO vs. GTO design • Low payload weight or volume vs. heavy or large volume • Low cost: per pound, per flight, or per year • Multiple designs required/emerge to meet the wide spectrum of all customer needs. • Synergies remain a challenge; yet where found and exploited, can reduce LV financial and market risks Consequences • Customer: government vs. commercial • Safety, reliability and availability • Cargo/satellite vs. human rated Consequences

3. Launch Industry Snapshot • Difficult Business Case • Difficult to forecast market • Limited customer base • Launch and payload schedule slips • Limited competition • Difficult for new entrants • 18 U.S. launches in 2011; only one was commercially-funded • Key • Yellow – 0-3 month slip • Orange – 3-6 month slip • Brown – 6- 12 month slip • Red – 1 year or more slip In 2011 there were a total of 48 international launches (with 3 failures); 10 of those were commercially-funded.

4. Summary • U.S. launch industry faces many challenges • Industrial base has been dramatically affected by market realities in recent years • Opportunities exist for improved business practices to lead to a sustainable launch industry • Leverage lessons learned from DoD and NASA development programs • Ensure business case closes for new vehicle developments before “launching” into them • Leverage existing assets, workforce and infrastructure wherever practical • Emphasize the importance of continuous improvement in reliability, safety, manufacturability, performance, launch availability, and system costs 3