Emma Kelly/LONDON

The space sector is set to more than treble in size to become a $130 billion a year industry in 10 years, according to projections from Boeing Space and Communications (BSC). Boeing, which says the sector is currently worth around $40 billion annually, aims to win an increased share of that market following its integration of Hughes Electronics' satellite manufacturing business.

The $3.75 billion purchase of Hughes early last year added a communications satellite capability to Boeing's existing global positioning system (GPS) satellite business, allowing it to offer a fully integrated solution for the commercial and military markets. As such, says BSC president Jim Albaugh, it was the "final part" of a three-to-four-year drive to create a fully fledged space group, following earlier acquisitions of parts of Rockwell and the whole of McDonnell Douglas, with its launch vehicle business.

BSC now has "a very balanced business", says Albaugh, achieving sales of $8 billion last year (up from $6.8 billion "pre-Hughes" in 1999) and $12 billion in orders. Anticipated sales are $10 billion for the current 12 months. Backlog increased to $13.4 billion from $10.6 billion, up 26%.

Highlights last year included six Delta II launches, a demonstration launch of Delta III and three by Boeing-led Sea Launch (including one failure), plus four Space Shuttle missions and the first permanent habitation of the International Space Station, for which Boeing is prime contractor. In December, the manufacturer picked up a $6 billion follow-on contract for the US National Missile Defense system, now likely to be expanded under a Republican administration.

Profitability was impacted by $505 million of non-recurring charges associated with acquisitions, mainly the Hughes business. Together with a $78 million charge against the Delta III demonstration, this caused BSC to lose $323 million after a $415 million profit in 1999. Operating margins, excluding non-recurring charges, fell to 3.2% from 4.7%, reflecting high R&D costs.

Albaugh says Boeing bought Hughes for its "in-depth knowledge" of space-based communications. "The future of communications is an infrastructure of terrestrial, wireless and satellite-based communications all integrated," he says.

Boeing says future growth will be led by information and communications (rising from $20 billion to close to $100 billion over 10 years) and missile defence (up from $6 billion today to $12 billion). The Hughes acquisition allows Boeing to enter markets neither could have penetrated alone, Albaugh says - such as inflight entertainment/ communications via Boeing's new Connexion division, and air traffic management solutions through Boeing's GPS and aircraft know-how and Hughes' communications expertise.

Source: Flight International