4
Second Quarter 2014
Industry Trends
(Aerospace)
Innovations and advances in the space sector are bringing changes to an industry long dominated by large
government-backed companies. Reductions in satellite size and lower launch costs thanks to the successful
entrance of such innovative private companies as SpaceX, are making space transport more affordable. SpaceX is
deep in developing a reusable rocket that will further reduce launch costs and in April filed a lawsuit protesting the
award of an $11.0 billion Air Force contract to United Launch Alliance (ULA). SpaceX founder Elon Musk, stated in
his congressional testimony that each ULA launch cost the Air Force an averaged of $380.0 million in its last
budget year while each SpaceX launch would cost well below $100.0 million. Further adding to the debate, is
ULA’s reliance on the Russian-made RD-180 engine, which could be threatened by sanctions as US-Russia
tensions continue to grow. Meanwhile, Orbital Sciences, which produces and launches small and medium class
space and rocket systems, announced in April that it will merge with Alliant Techsystems (ATK) Aerospace &
Defense Groups to form Orbital ATK which will be valued at $5.0 billion. Both ATK and Orbital are regular launch
industry partners with ATK having provided 400 rocket motors for launch vehicles built by Orbital.
Innovations in satellite technology are helping to drive demand for space transport. Industry pioneers and startups
such as Skybox Imaging and Planet Labs are making strides in reducing satellite size. Skybox, which builds
satellites and specializes in processing the increasingly massive quantities of satellite data, was purchased by
Google for $500.0 million in cash. Skybox satellites are 20x smaller, 10x cheaper than traditional satellites and
visual acuity is generated from its software rather than optics. Meanwhile, Skybox’ BusBoy framework is based on
open source technologies enabling rapid production deployment of future algorithms against its satellite data. The
transaction grabbed industry attention as a major liquidity event for a venture-backed space company and because
of Google’s longtime partnership with Skybox’ industry competitor and traditional satellite company, DigitalGlobe.
Also boosting the value of satellite technology advances in Q2 was the US Government’s decision to relax
restrictions on commercial sale of higher-resolution images. DigitalGlobe received approval in June to sell images
with a resolution of 40 cm immediately and up to 25 cm by August following the launch of its Worldview 3 satellite.
DigitalGlobe estimates this move will unlock $400 million in additional market opportunities.
06/30/14
A320 Family A330/A340/A350 A380 5,546
4,372
985
189
Company
as of
Unfilled Orders by Aircraft Model
Totals
06/30/14
737
747
767
777
787
5,237
3,931
50
48
339
869
Major Commercial Aircraft Backlog
Source: Boeing and Airbus Public Filings; Industry Newswires
Space M&A Activity
$5B merger
April 29, 2014
June 10, 2014
ACQUIRES
EV $500M
Total backlog for Boeing and Airbus grew by 1% (108 aircraft) to
10,675 aircraft. Boeing continued to beat out Airbus in 2014, booking
553 orders and delivering 342 aircraft year-to-date. Meanwhile, Airbus
delivered 303 jetliners compared with 295 in the same period last
year. Taking cancellations and conversions into account, Airbus’ net
bookings for the first half of 2014 was 290 aircraft.
