SatelliteFinance spoke with Mark Pieczynski, VP of strategy and business development for the group’s flight systems division, and Chris Richmond, VP of its commercial satellites unit, about how Orbital ATK is adapting to this changing environment.
Orbital ATK’s multibillion dollar merger, first announced in 2014 and completed February 2015, was the most notable deal of the year. By combining their satellite and rocket expertise, the group sought to strengthen its position during a period of major change in the industry, headlined by strained government budgets, increased competition and new space technologies. SatelliteFinance spoke with Mark Pieczynski, VP of strategy and business development for the group’s flight systems division, and Chris Richmond, VP of its commercial satellites unit, about how Orbital ATK is adapting to this changing environment.
Launch business
Jason Rainbow: What progress has Orbital ATK made to return its Antares rocket to flight following its launch failure in December?
Mark Pieczynski: Antares is on track for return to flight in 2016. Modifications to the core have been finalised, pad repair was completed in September, and the new engines have been installed into the vehicle as we prepare for a hot fire test in late 2015/early 2016.
We are also preparing for a NASA Cargo Resupply mission on Cygnus on December 3, aboard United Launch Alliance’s Atlas V rocket.
JR: Orbital chose Russian engines so an upgraded Antares could return to flight as soon as possible. How will you handle the limitations that puts on you to launch US government payloads?
MP: The extensive RD engine family flight history and demonstrated performance makes the RD-181 engine a low-risk, high reliability solution for Antares, and it was the only available solution to re-engine the Antares launch vehicle in the timeframe required to meet our schedule commitments.
Orbital ATK recognises limitations on the use of Russian engines for US National Security payloads and does not intend for this configuration of Antares to compete for EELV or National Security Space Missions. Orbital ATK does support smaller critical USAF missions currently through our affordable fleet of Minotaur launch vehicles.
There are no limitations on the use of Russian engines for civil or commercial missions. Orbital ATK is evaluating other solutions which could address broader markets including US National Security Space.
JR: Are you considering using a domestic engine later down the line? If so, when and would you seek to develop it in-house?
MP: Yes. Orbital ATK continues to assess and evaluate alternative propulsion solutions and even alternative vehicle concepts. The merger between Orbital and ATK has enabled further collaboration across the new company, strengthening our ability to field internally developed solutions. Orbital ATK is considering a domestic propulsion solution for Antares that could be implemented should international issues or market demands warrant it.
JR: Orbital Sciences has concentrated its rocket capability on small and medium class rocket systems. What growth opportunities are out there for this class in light of increasing competition from other launch providers?
MP: Orbital ATK continues to see a viable market for small and medium class rocket systems, and increasing competition in this class supports this evidence. Unlike most new entrants in this category, Orbital ATK has demonstrated launch experience and an extensive track record of success. We are also assessing the costs savings along our rocket lines, realising the strengths of our newly merged company.
JR: Are there other advantages for focusing on this market, and would you consider branching into heavier lift vehicles?
MP: Orbital ATK continues to assess opportunities in the space segment at large, both in launch and in the satellite markets.
JR: There has been a significant uptick in small satellite launches recently, how big can that market be – and will demand mainly come from the government?
MP: While there seems to be an up-tick in interest, and an increase in the number of cube-sats co-manifested on other missions, the number of actual dedicated small satellite launches have not increased significantly. There are emerging constellations of small spacecraft that are proposed, and Orbital ATK stands ready with proven launch solutions should these programmes materialise.
JR: Like SpaceX, do you think the heritage you have with NASA puts you in a good spot for securing commercial deals?
MP: Reliability, cost, and schedule dependability are the most important factors in commercial launch. A history of NASA support, associated certification, and on-time launch is a testament to the reliability and schedule dependability of our vehicles, which may give other customers confidence in our vehicles.
Satellite business
JR: After a challenging 2012, Orbital has been securing a series of sizeable deals. How are you seeing the momentum for contracts, and how does it look in the near term?
Chris Richmond: We are very pleased with the momentum we have had with the introduction of the Geostar-3 platform in the spring of 2014. We did win three programmes over a nine month period but the momentum has been somewhat offset by the slow uptake of orders we’ve had in 2013. The market in general is a little slow and there are a lot of reasons for that. We’re confident that this Q4 will pick up quite a bit and be the busiest quarter of the year.
There are several procurements ongoing in our class, and there are probably a good deal of other procurements going on in larger satellite classes too. There will probably be more awards in Q4 than there have been in the year to date.
JR: With high throughput satellites rising in popularity, could this be a market that Orbital will increasingly create capabilities for?
CR: Two of the three Geostar-3 spacecraft that we have been awarded are high throughput satellites – Hylas 4 and Al Yah 3. The third satellite is SES 16, which is a multi-mission satellite using dedicated military frequencies.
We’re very bullish on the high throughput market, and we’re doing a lot of work to develop more capabilities in that area as we think it’s a big marketplace coming forward.
JR: How many of these orders that you’re hoping to get in Q4 are for high throughput satellites?
CR: I think they’re a part of two or three of the proposals that we have outstanding. I’d say about half of the proposals we’re seeing feature high throughput payloads – including those that are hybrids with something like C band. It’s very robust right now.
JR: And this trend is accelerating?
CR: Right, and I’d say there are a lot of very large Ka-band high throughput systems that are too expensive for a lot of the operators. Geostar-3 is a mid-size platform and we think there’s a really great niche market for this class of satellite, and we’re seeing that in the marketplace.
JR: What about all electric satellites? When will this new technology also find its feet?
CR: We built the Dawn satellite for the Jet Propulsion Lab that used electric propulsion to go from Earth to the asteroid belt between Mars and Jupiter. So we were part of the team that has done more with a single satellite electric propulsion system than anyone else in the world.
Our approach for the commercial side is to use a hybrid propulsion system that uses a chemical system for orbit raising, and then electric propulsion for when it is in orbit.
By doing that we can get to the market six to eight months sooner than our competition, which is very important for our customers. But if there’s a value proposition associated with using all-electric propulsion system that enables significant cost savings, then we’ll do that for our customers.
Right now we believe we have a really great niche with our hybrid system, which can sit on SpaceX’s Falcon 9, fit in the lower position of Arianespace’s Ariane 5, etc, and this has been very well received by the market.
JR: So you see most demand continuing to come from hybrid satellites rather than all-electric or other propulsion solutions?
CR: Very much so. Probably 75% or more of the satellites we’re proposing have a hybrid electric propulsion system. We think electric propulsion will become the standard in the industry – in our case for when a satellite is in orbit, and we can get there quick with a chemical system.
JR: Orbital ATK is set to launch the first batch of Skybox’s new satellites. Could Orbital have built and launched them itself?
CR: We can definitely build LEO satellites. We did the Orbcomm constellation years ago, and we’ve done a couple of small constellations since then. We do payloads for government, defence and commercial customers ranging from the very small Skybox-sized satellites up to larger missions, such as the Joint Polar Satellite System (JPSS), our nation’s next generation polar-orbiting operational environmental satellite system.
It was really about Skybox wanting to design their own satellites. But we can do jobs like that, and continue to do them today and probably will do more in the future.
JR: There’s a lot of buzz surrounding LEO internet constellations right now, and ventures such as Oneweb have been able to secure sizeable investments. Are you looking to get involved in this activity?
CR: We are looking at constellation work, and trading each one off with what we can do and where we could add the best value for the customer and ourselves. We’re not building Oneweb’s satellites because they went with Airbus, but we could work with them as a supplier.
We’re already working with Thales on the Iridium constellation, where we’re working on the integration and testing of the spacecraft at our Arizona facility.
There’s a lot of people talking about LEO constellations today, and I think it’s great for business. I think the trick is figuring out which ones add value for us and the customer.
JR: Did you have an opportunity to pitch for the Oneweb constellation?
CR: We were aware that the RfP went out, but we didn’t bid on it.
JR: How concerned are you about the loss of Ex-Im affecting your ability to win new orders?
CR: Our opinion is that it’s an issue that’s going to be resolved. It’s an unfortunate delay but we’re confident that the bill everyone is circling around now will get approved.
It provided a short term challenge for us, and it’s a short term issue for a lot of American workers. That’s the probably the bigger problem. It’s not just the satellite manufacturers, it’s much, much bigger than that. But yes that’s one of the factors why the market has been a little slow.
JR: Ex-Im’s absence was blamed for Orbital ATK not winning a satellite deal with Azerbaijan recently. SSL, which can get Canadian export credit agency support, was reportedly selected to build Azerspace-2. Is there a risk that the Ex-Im issue could disrupt any of these contracts you’re hoping to secure this year?
CR: I don’t believe there is. By all accounts in the press this is all going to be resolved in October. But I want to emphasise that I don’t think it’s as much about the loss of opportunity to build satellites as it is about the jobs, and business plans that are delayed because people can’t get access to financing. But I think everyone is optimistic that this will be resolved shortly.
JR: If it doesn’t get resolved, could Orbital ATK consider something radical such as developing a base outside the US so it can get access to cheap financing?
CR: What I would say is, we’re always looking at alternative ways to meet our customers’ needs, and if they have a financing requirement then we’ll look at alternatives that are around. Not every customer is looking for Ex-Im. We have a track record of giving customers what they’re looking for whatever the political climate.
