Lockheed Martin and Boeing Unite to Form United Launch Alliance, Cut Costs, and Settle Litigation

Strategic Insights -

The two largest military contractors, Lockheed Martin Corporation and the Boeing Company, have announced a joint venture to provide and launch rockets for the Air Force and NASA. The new company, United Launch Alliance, aims to cut costs by approximately $100 million to $150 million annually and settle civil lawsuits between the two companies. The joint venture is expected to be completed by the end of this year, with a combined workforce of 3,800 employees across five states.

Key Takeaways:

  • The joint venture, United Launch Alliance, will be a 50-50 partnership between Lockheed Martin and Boeing, with a focus on cutting costs and settling civil litigation between the companies.
  • The transaction is expected to save the federal government approximately $100 million to $150 million annually.
  • The joint venture will be based in Denver, Colorado, and will have employees at sites in five states: Colorado, Alabama, Florida, California, and Texas.
  • Lockheed and Boeing will request a court order suspending civil litigation related to space launching competition, and dismiss claims against each other when the transaction closes.
  • Michael C. Gass, general manager of Lockheed Martin Space Technology, will lead the joint venture.
  • The combination of Boeing's Expendable Launch Systems division and Lockheed's Space Systems unit is expected to result in the loss of an undetermined number of jobs.
  • Lockheed's shares rose 91 cents to $61.86 on the New York Stock Exchange before the announcement, while Boeing's shares fell 14 cents to $59.38.

Statistics:

  • Estimated annual cost savings: $100 million to $150 million
  • Number of employees in the joint venture: 3,800
  • Number of states with joint venture sites: 5 (Colorado, Alabama, Florida, California, and Texas)
  • Estimated loss of jobs during the combination of Boeing's Expendable Launch Systems division and Lockheed's Space Systems unit: Undetermined

Sources:

  • The New York Times, "Lockheed and Boeing to Form Joint Venture to Save on Rocket Costs"
  • Lockheed Martin Corporation and Boeing Company joint statement