By Joey Roulette
WASHINGTON (Reuters) - NASA's decision to send Boeing's Starliner capsule home without any astronauts follows years of missteps by the planemaker in its space sector and raises doubts about the unit's future, analysts and industry sources said.
Carrying NASA astronauts Butch Wilmore and Suni Williams to the International Space Station (ISS) would have been a turning point for Starliner after years of delays, technical glitches and supply chain missteps. Starliner has cost Boeing $1.6 billion in overruns since 2016, according to a Reuters analysis of securities filings.
The astronauts were supposed to stay on the ISS for about eight days, but due to problems with Starliner, that has been extended to eight months.
Starliner's propulsion system malfunctioned, and NASA deemed the troublesome boosters unsafe for the return trip. So Wilmore and Williams will be brought home next year in a SpaceX Crew Dragon capsule, the latest humiliation for Boeing at the hands of Elon Musk's dominant space company.
The mission was intended as a final test before NASA could certify Starliner for routine flights. Boeing's new CEO Kelly Ortberg must now decide whether to keep pouring money into Starliner, which analysts doubt will ever be profitable, or to unravel the capsule business and focus on rebuilding the tarnished reputation of its main aircraft manufacturing division.
Elsewhere in the aerospace sector, U.S. government regulators have repeatedly reported that Boeing is years behind schedule and billions of dollars over budget as prime contractor for NASA's massive Space Launch System (SLS) rocket, a key part of the U.S. moon program.
And the aerospace giant is already trying to sell a separate rocket launch company it jointly owns with Lockheed Martin, Reuters reported last month.
NASA Administrator Bill Nelson said he spoke with Ortberg on Saturday and ended the conversation with the assurance that Starliner would fly astronauts again. But that's no guarantee of a long-term commitment if Starliner's problems persist.
Asked whether Boeing would remain in the program beyond Starliner's current mission, a Boeing spokeswoman declined to comment, telling Reuters the company was focused on safely recovering the spacecraft.
"I'm not sure the decision ultimately rests with NASA. Boeing is going to have to foot a big part of this bill, as they have," said Lori Garver, a former NASA deputy administrator who was a key architect of NASA's Commercial Crew Program.
Ortberg, who took over as CEO this month, has been busy trying to convince Boeing employees, investors, airlines and the flying public that safety concerns have been contained after a panel dramatically flew off a 737 MAX jet in January.
Analysts said Boeing is likely to keep Starliner alive, in part because Boeing has had poorer experiences with other programs in its defense business. In the future, Starliner could serve customers other than NASA, such as private space stations that are set to replace the ISS after 2030, but that effort could change.
NASA'S BIND
NASA sees Boeing as a key backup to Musk's SpaceX, the only entity capable of putting people into orbit, alongside US rivals Russia and China.
Boeing has spent more than half of its $4.5 billion NASA contract awarded in 2014, and Starliner has yet to be certified. The contract, which has grown by $300 million despite its fixed-price structure, includes six post-certification Starliner missions that will fall further behind schedule with each mishap.
SpaceX's Crew Dragon was certified in 2020 and has flown 10 crewed missions for NASA since signing a contract initially worth $2.6 billion. NASA has purchased more Crew Dragon missions to make up for Boeing's delays, increasing SpaceX's contract to $4.9 billion.
Boeing may have to re-fly the astronaut mission to the ISS to get the space capsule certified by NASA. The company already had to repeat an unmanned mission in 2022 at a cost of nearly $500 million.
"I wouldn't rule anything out. We have options for how we move forward," NASA space operations chief Ken Bowersox, a former astronaut, told reporters Saturday when asked if Starliner could be certified without a re-test. He didn't give specific options.
It has been five years since the first unmanned test of the Starliner failed due to several critical software issues. Since then, SpaceX has overtaken Boeing in rocket launches, human spaceflight and satellite production.
NASA's inspector general estimates the cost of the Crew Dragon mission is about $55 million per seat, while the Starliner is around $90 million.
DEEP PROBLEMS
Boeing's aerospace unit has been grappling with an exodus of skilled workers for years, with many joining SpaceX and Jeff Bezos' Blue Origin. Boeing's unwieldy supply chain makes designing spacecraft more complicated than it is for Musk's nimbler, largely vertically integrated operation, according to 10 people who have worked with Boeing's aerospace unit.
Boeing said in a statement to Reuters that the company is proud of its Starliner workforce and acknowledged the workforce and supply chain challenges in its earnings reports.
Throughout Starliner's development, the hardware and sometimes software of the propulsion system have been a persistent problem. New problems were discovered just hours before the spacecraft's first attempt at launch this summer. Helium, used to pressurize the propellant, was leaking through a small seal in a flange.
NASA deemed the leak low risk and allowed Starliner to launch. Still, officials said the propulsion system had a "design vulnerability" that Boeing must address before its next mission.
The Space Launch System (SLS) rocket is another problem for Boeing's aerospace unit. An August report from NASA's inspector general cited deep quality control problems, saying Boeing's SLS workforce in Michoud, Louisiana "does not have adequate experience, training and instruction in aerospace manufacturing."
A Boeing spokeswoman said the company disagrees with many of the claims in the report, "including the suggestion that our workforce in Michoud is not qualified."
Unlike Starliner, NASA is footing the bill for delays and development problems with SLS. The extent of the cost overruns is unclear because NASA does not keep accurate records, inspector general reports have repeatedly said.
NASA is trying to transfer ownership of SLS to Boeing and co-contractor Northrop Grumman to reduce costs, but that seems unlikely.
"Boeing's other businesses aren't all that vulnerable to disruption. But space? That's a different story," said Richard Aboulafia, an aerospace analyst.
Aboulafia thinks Ortberg will crunch the numbers and negotiate with NASA to make Starliner viable, but he is not convinced that this is the right move.
"If I were an advisor to Kelly Ortberg, which I'm not, I would say... for the space, well boss, maybe you should consider selling it," Aboulafia said.
(Reporting by Joey Roulette; Editing by Joe Brock and David Gregorio)