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Boeing probes rockets
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June 14, 1999: 9:49 a.m. ET
Aerospace firm tackles launch failures, targets information business
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PARIS (CNNfn) - Boeing Co. has launched a twin-track review of its rocket operations after two space launch failures threatened a major expansion in its communications business.
The failure of two of Boeing's new Delta III rockets to deliver their military satellites earlier this year racked up $3 billion in losses.
Jim Albaugh, president of Boeing's space and communications business, said it had commissioned former U.S. Air Force secretary Sheila Widnall to review the entire business while a second probe will look at the individual failures.
"We were very disappointed in our performance," admitted Albaugh at the opening of the Paris Air Show Sunday. "But we think we understand the problem."
Anne Toulouse, a vice-president of Boeing's space unit, said the review will focus on organization, supplier relations and process management, and report by the end of the third quarter. She said it was launched in the wake of a similar study by Lockheed Martin (LMT), which itself suffered two rocket failures at a cost of $4 billion.
Rocket manufacturers cite the growing complexity of satellites as the cause of a series of delays in planned launches, but the failure of the rockets themselves has dented confidence at a time when demand for cellular and Internet services has boosted satellite demand.
Toulouse said the review was intended to boost confidence among customers in the intensely competitive rocket business. "We have to make sure we do everything we can to strengthen our reliability," she said.
Albaugh said sales of the space group were set to double from $7 billion last year over the next six or seven years. He said the rocket market would remain flat but diversification offered valuable opportunities. "The real growth is in information and communications," he said.
Boeing forecasts that mobile satellite and multimedia services will grow to an $80 billion a year industry by 2008. "We have targeted broadband data for the mobile user," said Albaugh, forecasting that 3 percent to 5 percent of the communication market will be served by satellites.
Albaugh also voiced commitment to the Teledesic multiple satellite joint venture with Microsoft (MSFT) and Motorola (MOT). The multimedia project,, in which Boeing invested $50 million, has been troubled by disputes over its schedule and how many satellites it will use. Some industry observers have doubted whether it will ever leave the launch pad.
Boeing also announced a launch customer for its Sea Launch vehicle, which fires rockets from a floating platform. Hughes Electronics commissioned the launch, scheduled for August 22, with a satellite for Direct TV. 
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Boeing
Lockheed Martin
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