United Launch Alliance Faces Challenges but Aims for Recovery in 2024
2023 proved to be a difficult year for United Launch Alliance (ULA), but the company is gearing up for a turnaround.
The ULA was created from the merger of Boeing‘s (NYSE: BA) and Lockheed Martin‘s (NYSE: LMT) rocket divisions at the end of 2006. The company quickly established itself in the U.S. space launch industry, achieving a record 16 launches in 2009. However, the landscape shifted in 2010 when SpaceX launched its Falcon 9 rocket, which changed the game for commercial space travel.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
By 2015, the Falcon 9 was a strong competitor in the market, especially after its reusability significantly reduced launch costs. This shift allowed SpaceX to claim ULA’s position as the top choice for U.S. national security missions. At the same time, ULA began to retire its Atlas V and Delta IV rockets, making way for the Vulcan rocket, which further limited its launch opportunities.
In 2023, ULA managed only three launches, a stark contrast to its earlier success.
Hopes for a Stronger 2024
Despite the setbacks, ULA is looking ahead to 2024, laying the groundwork for a potential recovery. The long-awaited Vulcan Centaur rocket, delayed for four years due to engine issues and the impact of the COVID-19 pandemic, had its inaugural launch in early 2024. Its second launch followed in October, intended to qualify Vulcan for national security missions, similar to its predecessors.
However, complications arose during the second launch. While the Vulcan successfully placed its payload into orbit, an anomaly occurred with one of its solid rocket boosters, produced by Northrop Grumman (NYSE: NOC), when its nozzle detached mid-flight. Although the Federal Aviation Administration (FAA) did not express serious concerns, the incident drew attention due to historical issues associated with Boeing products.
Many observers remembered past incidents, such as issues with a Boeing airplane door plug, which raised questions about quality control.
Two months post-launch, the FAA has yet to formally approve the Vulcan for additional flights. The Air Force has not certified it for national security missions either.
Will 2025 Be a Turning Point for Boeing?
Nevertheless, ULA is anticipating progress. CEO Tory Bruno indicated in a recent interview that certification for Vulcan may be granted soon, possibly within a few months. He emphasized that the FAA likely won’t require further testing or additional flights, suggesting a hopeful outlook for ULA.
Timelines are critical. In 2025, ULA plans to launch two U.S. national security missions using Vulcan, but this is contingent on obtaining certification. Overall, ULA aims for 20 launches in 2025, which would surpass its previous annual record.
Image source: Getty Images.
The Future of ULA’s Launch Capacity
Production capabilities appear robust, with ULA reporting an inventory of 16 Vulcan rockets. Blue Origin is also ramping up engine production to support a planned cadence of up to 26 Vulcan launches annually.
Overall, ULA aims for 20 to 30 launches a year, with around half expected to be government missions and the other half commercial. Bruno noted that this ratio reflects healthier growth compared to 2014, when commercial launches represented less than a quarter of ULA’s activity. Yet, achieving a 50% commercial launch rate could be challenging, as ULA’s commercial launch portfolio was nearly nonexistent in 2013 and minimal in 2014.
Noteworthy is ULA’s contract to launch 47 rockets for Amazon.com (NASDAQ: AMZN), dedicated to deploying Kuiper internet satellites. This contract could fulfill a significant portion of ULA’s commercial launch ambitions, potentially covering three to four years of its 50%-split goal.
The Amazon deal should facilitate a strong start for ULA, especially with the looming military certification. However, continuing to sustain that growth post-Amazon remains an open question. Different companies will have varying priorities, especially with the looming mid-2026 deadline for launching half of Amazon’s satellites.
Analyzing Investment Opportunities in Boeing
Considering an investment in Boeing? It’s crucial to weigh your options carefully:
The Motley Fool Stock Advisor analyst team recently pinpointed what they believe are the 10 best stocks for investors now—and Boeing is not one of them. These recommended stocks could generate significant returns in the near future.
Reflecting on history, had you invested $1,000 in Nvidia back on April 15, 2005, it could be worth around $859,342!*
Stock Advisor offers investors a straightforward path to success, complete with portfolio-building guidance, analyst updates, and new stock picks each month. Since 2002, members have experienced returns exceeding quadruple those of the S&P 500*.
See the 10 stocks »
*Stock Advisor returns as of December 23, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Smith has no position in any of the stocks discussed. The Motley Fool holds positions in and recommends Amazon and Lockheed Martin.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
