SpaceX has accomplished remarkable things, including landing the first stage of its Falcon 9 launch vehicle twice, once on land and once at sea on a drone barge. But the failure or success of any commercial enterprise, whether it launches rockets or makes hamburgers, is how profitable it is. If a corporation doesn’t earn money, it will sooner or later be forced to cease operations. How profitable is SpaceX? The Motley Fool reported on Sunday that the private launch company is pretty profitable while able to provide services to customers at a much lower price than its main competitors, United Launch Alliance, and Airbus Safari Launchers.
“According to SpaceX’s published list of launch prices, average Falcon 9 launch currently costs $61.2 million. (The new Falcon Heavy, which will make its maiden voyage later this year, will cost a bit more.) That’s already half the best price that Boeing and Lockheed Martin charge for a launch over at United Launch Alliance. It’s cheaper, too, than the $77 million that Airbus’ (NASDAQOTH:EADSY) joint venture Airbus Safran Launchers will charge for its new Ariane 6 rocket.”
Motley Fool notes that Lockheed Martin earns a 12.6 operating profit margin on its space systems while Boeing has a less than 10 percent margin on its space and network business. SpaceX doesn’t publish its profit margin, but the assumption is that it is around 10 percent.
Reusability is the game changer that is coming to the rocket launch business, thanks to SpaceX’s efforts to land and reuse the Falcon 9 first stage. The company estimates that a launch with a used first stage will allow it to offer a 30 percent discount to the customer. That means that at current prices, SpaceX would enjoy a remarkable 40 percent profit margin.
“With margins like those, SpaceX would have the option of maintaining its prices — already the cheapest on Earth — and reaping gargantuan profits. Or SpaceX could lower its prices, pass savings along to its customers, and crush its competition at a whim. Or anything in between, and not necessarily in that order.”
ULA is not sleeping as these developments unfold. It is developing its own reusable rocket, the Vulcan, that it hopes will allow it to go head to head with SpaceX. Vulcan will begin service in 2019. The company expects to add reusability to the Vulcan sometime later with a midair recovery feature.