Alaska Aerospace kicks off new Enterprise

Tuesday, July 10, 2018 - 09:45

By GABE STUTMAN gabe@kodiakdailymirror.com | 0 comments

KODIAK — The Alaska Aerospace Corporation began a new chapter on Friday, opening Aurora Launch Services, LLC, a wholly-owned subsidiary of the state corporation.

Aerospace CEO Craig Campbell said the new outfit will save taxpayer money by reducing personnel costs, and increasing flexibility as the corporation expands into the commercial spaceflight market.

Since taking the helm in 2012, one of Campbell’s top priorities has been to make the corporation financially solvent.

“I made the pledge that AAC would become a profitable company,” he testified before the state Senate Finance Committee on March 18, 2016.

But due to a change in federal policy in 2011, government launches – which had sustained the AAC since its inception in 1996 – waned.

As a result, it struggled to break even over the last seven years, and received millions in state funds over that span, including at least $16 million in operating funds and $3 million for a capital improvement project – a medium-lift expansion – that never materialized.

In total, the AAC has received as much as $58 million in state funds, and in 2014, Governor Walker cut off all funding to the spaceport via an administrative order.

But in 2016, things appeared to turn around for the high-tech Alaska enterprise.

The corporation signed a contract with the Missile Defense Agency worth up to $80 million, and in 2017, two MDA-launches, a successful launch from California-based Rocket Lab, and other consulting work led the corporation to turn a relatively small profit – about half a million dollars – for the first time since Campbell became CEO.

By starting a wholly-owned subsidiary in Aurora, Campbell hopes to continue to reduce reliance on state funds and increase flexibility in the commercial spaceflight market, a booming industry across the globe.

Savings will come from controlling personnel costs, Campbell said. Currently, the AAC has 22 full-time employees, 12 of which are employed by the state, and ten are full-time contractors.

State employees receive hefty salaries, and robust health and retirement plans.

“Basically state employees are expensive,” Campbell said.

Aurora will also use fewer full-time employees and more part-time workers, tapped specifically for launches. Historically, the AAC has facilitated between two-three launches per year – either at the spaceport or via launch services elsewhere – though they are hoping to increase that number.

“I want to have well-compensated individuals, but take away a lot of the external costs,” Campbell said. “Going to part-time will eliminate some of the full-time burden, and it will also reduce travel costs.”

“There will be a small cadre of people that keep the facility operating,” he added.

The AAC aims to expand its launch services component – where employees travel around Alaska and around the globe to assist commercial companies.

A current contract with Rocket Lab has spaceport employees traveling to New Zealand. The AAC recently signed an extension with Rocket Lab through July 4, 2019.

The AAC has four commercial contracts in total with companies including Arizona-based Vector, Rocket Lab, and two unnamed companies. The Kodiak spaceport is still awaiting its first successful commercial launch, which is scheduled for later this summer.

Diversification, and expanding revenue sources, is a goal for the AAC, especially in an unpredictable industry.

This year, for example, the delay of a planned military exercise cut into the corporation’s annual bottom line. A test of a missile defense system in collaboration with the Israeli government, originally planned for this summer, was postponed until next year due to unspecified technical issues.

“We probably will not be making much of a profit, if any, this year,” Campbell said. “All those revenues didn’t occur.”

“But next year could be very good for us,” he added.

John Cramer will direct the new outfit. He is currently the AAC’s chief of staff.

Cramer said Aurora will aim to more nimbly meet the demands of its customers.

It will provide “streamlined, efficient launch services based on customer defined requirements,” he said via press release. “I look forward to this new horizon of aerospace development in Alaska.”