Orbital Sciences has launched more than 800 satellites, logged 1,000 years worth of operations and its craft have traversed two billion miles in the past three decades. From a scrappy space start-up founded in 1982 by three Harvard Business School friends, the Dulles-based company has come a long way, literally and figuratively.
Orbital’s $5 billion merger with longtime partner Alliant Techsystems — announced last week — completes its transformation from the original commercial space start-up to a more traditional aerospace contractor.
The company’s journey has been marked by a generally solid record of sending gear into space at a cost that is lower than some of the more established space giants, though it has suffered its share of failures at times.
“Orbital began as a group of entrepreneurial space enthusiasts that has gradually evolved to become a well-established and diverse player in the aerospace industry,” said Loren Thompson, a defense analyst and consultant to Lockheed Martin.
Its transformation speaks to a larger truth in Washington’s crowded aerospace sector, Thompson said: When you’re dealing with a customer as capricious as the federal government, whose ties with big players run deep, you have to evolve to survive.
Once approved, the merger with ATK is set to lift Orbital into a higher league, analysts said.
“From a strategic standpoint, this merger will create a much larger and more capable, but still highly innovative, agile and competitive space and defense systems manufacturer,” David Thompson, the company’s chief executive, told investors in a call.
Federal budget cuts and the end of NASA’s space shuttle program have made the commercial space sector more competitive. Orbital’s consolidation bolsters its ability to compete with United Launch Alliance, a Boeing-Lockheed partnership, or SpaceX, billionaire entrepreneur Elon Musk’s venture, analysts said.
Musk made headlines last week for suing the federal government over the Air Force’s awarding of a lucrative space contract to ULA. Musk protested the process by which some launch contracts were awarded, saying they were closed to competitive bids and that SpaceX could offer significantly cheaper rockets.
In many ways, SpaceX’s beginnings mirror Orbital’s own, said Linda Billings, a longtime space policy analyst and NASA consultant.
“Orbital had ideas in the very beginning of being very new and different from the traditional government contractors,” she said.
But the company quickly realized the only way to grow business was to be more like a traditional contractor, she said. “And they did it well.”
The company has built ties in Washington over a generation and weathered policy and economic changes.
“Every start-up eventually needs to transition to a stable business model,” Thompson said. “Orbital has learned that the hard way.”
That’s why the merger holds other benefits for the company — a chance to diversify its business and seek customers outside the government, just like other contractors.
Orbital indicated that it wants to expand its footprint in the defense sector, an area that ATK has more experience with. Although the company works on some defense projects, it has occasionally struggled to grow revenue because of its space focus.
A defect in the Amazonas 4A telecommunications satellite caused revenue to drop 2 percent in the first quarter. Last year, Orbital’s annual revenue was down 5 percent, mainly because of a 22 percent drop in the satellites and space systems segment, which has seen slow growth over the past five years.
As it enters a new phase in its business, Orbital says it will continue to focus on its core mission — making outer space affordable.