Boeing explores commercial space travel

The airplane maker's new plan to return to the Kennedy Space Center to build passenger spaceships was heralded by all parties involved.

By Trefis Nov 7, 2011 10:55AM
NASA's recent decision to halt space shuttle operations pending additional budget cuts had severe repercussions in Central Florida. Thousands of jobs were lost and, until recently, commercial property and other assets sat idle.

Boeing
's (BA) recent announcement that it plans to return to the Kennedy Space Center to build passenger spaceships was heralded by all parties involved. In addition to expected job growth up to 550 in the next three years, the combined effort with Space Florida (a state-backed agency that works with space-related companies) will allow Boeing to ramp up production of the company's CST-100.

We believe there is significant potential in that market for Boeing as well as competitors such as Lockheed Martin (LMT).

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Market Potential


If recent figures are any indication, commercial space travel may prove to be a profitable enterprise for Boeing. President Barack Obama has asked for $850 million to invest in passenger spaceships and NASA has already awarded contracts totaling $2.5 billion to build spacecraft to shuttle supplies to the International Space Station. Currently, Russia charges NASA $350 million annually to do so.


Boeing may have found a burgeoning market, one that perhaps will make up for NASA budget cuts that are certain to make a dent in the company's U.S. Defense, Space & Security Systems division. That division contributes about 32% of the $91 Trefis price estimate.


Total DoD, NASA & Homeland Security (HS) Contract Spending

The Future of Commercial Spaceships


For skeptics, Boeing and competitors are quick to point out several compelling arguments. First, this program would be profitable even if it only served the needs of NASA, and other revenue sources are available. Cargo transportation, servicing satellites and leasing the spacecraft to other countries would all add incremental revenue.


The CST-100 program is an opportunity for Boeing to be on the forefront of a growing marketplace. While it is difficult to determine what impact the program will have on Boeing's revenues, investors hope it will be enough to offset pending declines in NASA-related revenue.

 

More from Trefis:

Analysis of Boeing's stock

Tags: BA
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