Air Force to Pay Boeing, Lockheed More

Boeing Co. and Lockheed Martin Corp. will be paid 50% more to send U.S. military satellites into space to compensate for the collapse of commercial demand that threatens their launch businesses, an Air Force official said Wednesday.

Payments will increase to as much as $135 million per launch from $91 million, based on a preliminary estimate, because the service wants to ensure the companies stay in the military program, said Richard McKinney, the Air Force’s deputy director of space acquisition.

“We are going to pay more, but the companies are not going to get rich off of this,” McKinney said. “They are going to be covering their costs.”

The Air Force plans to spend $4 billion on launch services through 2009 using systems developed by Boeing and Lockheed, McKinney said. The two companies are relying more on military contracts after the commercial market shrank by almost two-thirds because growth in communication satellite service never materialized after the bankruptcy of companies such as satellite telephone company GlobalStar.

In July, Boeing reported a second-quarter loss of $192 million, partly because of an $835-million pretax charge for increased launch costs and a reduction in its five-year forecast for commercial launches. Boeing cut the forecast in half.

Boeing suffered another blow in July when the Air Force suspended three Boeing space units for improperly obtaining and possessing proprietary Lockheed space program documents. Boeing was forced as a penalty to transfer seven of 27 launches it won in 1998 to Lockheed. Those launches would have brought in about $1 billion in revenue.

The suspension is still in place and the Justice Department is conducting a separate criminal investigation.