(Bloomberg) -- Boeing Co. is weighing options for its Starliner operations as part of a broad review, raising the potential it will end one of the most storied histories in American space exploration.
While the assessment of whether to walk away from a key NASA program remains in the early stages, it marks the most concrete step yet by the US aerospace juggernaut to rethink its role in the commercial space business.
Boeing has remained the most prominent of the old-guard aerospace manufacturers working with NASA as Elon Musk’s SpaceX has risen from an upstart to the industry’s dominant force. A diminished Boeing – or one that is entirely absent from the industry — would leave the US government inextricably reliant on SpaceX for putting astronauts in space from US soil, at least until other companies enter the market.
“Having a resilient way to get astronauts to the space station is at risk,” Clayton Swope, deputy director of the Aerospace Security Project at the Center for Strategic and International Studies, said of the Boeing review.
Boeing’s new Chief Executive Officer Kelly Ortberg is assessing the company’s portfolio to raise cash, weed out under-performing units and rescue a company in crisis. The review of the Starliner program signals Boeing may unwind or sell an operation marred by years of glitches with more than $1.8 billion in cost overruns and delays.
Shedding Starliner would mean turning its back on a roughly 60-year lineage of flying America’s astronauts to space — from the iconic Saturn V rocket that carried Neil Armstrong to the moon to the plane-like shuttles that flew to the International Space Station, which Boeing currently manages.
As Starliner ran into multiple delays, SpaceX’s rival Crew Dragon capsule has made 43 visits to the ISS since 2019, carrying both crew and cargo for NASA. The agency recently hired SpaceX to rescue two Americans stuck at the space station, after Starliner’s thruster problems forced the agency to order the vehicle to return to Earth empty.
“Boeing was supposed to be the sure bet,” said Chad Anderson, Managing Partner of Space Capital and a SpaceX investor. “If they walk away, it’s a sad thing for America, for competition and for access to space.”
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NASA and Boeing are still working together to resolve the issues experienced during the company’s most recent test flight, with the goal of eventually certifying Starliner for regular crewed flights — unless something changes on the Boeing side, according to a person familiar.
Boeing doesn’t comment on market rumors or speculation, a spokesperson said by email. A NASA spokesperson declined to comment on Boeing’s review.
The Starliner review comes amid a crippling, six-week labor strike that has idled production of key jetliners, including the cash cow 737 Max. The work stoppage is exacerbating Boeing’s strained finances, with its credit ratings on the edge of junk and worsening cash burn, which the company projects will extend into 2025.
Ortberg said he wants to focus resources on Boeing’s core commercial aircraft and defense divisions and is looking to streamline its broad portfolio, with an eye toward “doing less and doing it better.” He expects to decide which units are to be divested by year-end.
Even before news of Boeing’s potential space exodus, which was first reported by the Wall Street Journal, the future of Starliner was unclear beyond a plan for a half-dozen more missions to the space station for NASA.
Its costs are likely to continue stacking up, especially if NASA requires another test run to the space station. Starliner “may already be obsolete,” Agency Partners analyst Nick Cunningham told clients in a memo on Wednesday, calling the vehicle a “disproportionate loss maker.”
Boeing and Lockheed Martin Corp. have been trying to sell their United Launch Alliance joint venture over the past year. Boeing’s space portfolio also includes a lucrative contract for NASA’s SLS moon rocket, though it’s expected to cost about $2 billion per launch and SpaceX says it’s working on cheaper alternatives. The ISS is heading toward retirement.
Boeing isn’t the only legacy space player suffering. Airbus SE plans to eliminate as many as 2,500 positions at its defense and space division as the European aircraft manufacturer seeks to streamline the business amid stiffer competition.
Boeing may decide to keep some or all of its space portfolio, which also includes defense products like spy satellites and the clandestine X-37B space plane.
Yet in the last decade, Boeing has fallen behind major technological leaps made by SpaceX, which has slashed the cost of space travel by reusing boosters and building a majority of components in-house.
Besides the prospect of relying on Russia if SpaceX suffers a failure, Anderson said there’s risk to taxpayers and the industry at large if Boeing leaves the business.
“SpaceX isn’t going to lower prices on their own. Until you bring in more competition, nothing can challenge that,” he said. “Competition is good for everyone. More innovation, lower prices, more participation, more ideas.”
--With assistance from Julie Johnsson.
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