McDonnell Says Unit Received 9 Rocket-Launch Reservations

In a boost for its hope of becoming the nation’s pre-eminent private rocket maker, McDonnell Douglas Corp. said Tuesday that its Huntington Beach-based astronautics unit has received down payments from eight commercial customers to reserve future launches of its modified Delta II rocket.

While far from being firm orders for the medium-range, three-stage vehicles, the launch date reservations are an important early step in negotiations that could lead to $350 million or more in commercial business. The eight customers reserved a total of nine dates at a reported cost of $50,000 per reservation.

In January, McDonnell Douglas Astronautics Co. won a critical Air Force contract to provide seven Delta II rockets, valued at $316.5 million, through 1990. The contract carried an option, worth up to $430 million more, for as many as 13 additional Deltas through 1992.

Additionally, McDonnell Douglas has a contract to supply the National Aeronautics and Space Administration with four of its less powerful Delta I rockets.

In securing the Air Force pact--which will help underwrite development costs for the commercial rockets as well--McDonnell Douglas defeated rival rocket builders General Dynamics, maker of the Atlas rocket, and Martin Marietta, which builds the Titan.

While the military version of McDonnell Douglas’ Delta costs about $35 million, industry analysts and company officials have said that the commercial versions could average about $40 million.

The higher cost would represent both a higher profit margin and more-expensive alterations for private customers.

The nine launch reservations include two by Communications Satellite Corp., and one each by Pacific Satellite Inc., Contel ASC, Hughes Communications Satellite Services and the government of India. Three organizations declined to be identified, McDonnell Douglas said.

A major part of the astronautics unit’s business plan, a spokesman said Tuesday, is “to capture as many commercial contracts as possible,” as early as possible.

This would strengthen McDonnell Douglas’ position as a commercial rocket manufacturer and hedge against future reductions in military and NASA spending on satellite launches.

But industry analysts don’t see the early reception by the commercial communications satellite industry as a firm success for McDonnell Douglas because the future market is still uncertain.

Additionally, McDonnell Douglas does $10 billion in annual sales, and the commercial rocket business so far is a small percentage of the total, said Steven Binder, an analyst with Bear, Stearns & Co.

McDonnell Douglas officials agree that the commercial rocket business still is an uncertain one, but they sound an optimistic note about future prospects.