Closing Bell - Manifest Space: Stratolaunch’s Captive-Carry Flight 12/21/23

Episode Date: December 22, 2023

Stratolaunch’s giant airplane conducted its first-ever captive-carry flight with a fueled hypersonic test vehicle. The 12th flight for the company’s Roc launch platform, the mission brings the startup closer to the first powered flight of the Talon-A. CEO Zach Krevor joins Morgan Brennan to discuss the recent milestone, hypersonic flight’s total addressable market and the acquisition of the now-defunct Virgin Orbit’s Boeing 747 aircraft.

Earlier this month, Stratolaunch's giant airplane conducted its first-ever captive-carry flight with a fueled hypersonic test vehicle. The flight was the 12th for the company's launch platform, ROC, and marked a key milestone that brings Stratolaunch closer to the first powered flight of its Talon A. What we were focused on is ensuring that that test demonstrated that we are getting ready to release our hypersonic vehicle known as TA-1, it's the Talon vehicle. And so really very pleased with the results. We're finishing off the data review now and we'll determine our final steps to get us to our first powered flight in 2024 and then moving on and establishing reusable hypersonic capability in this country,

something we haven't had since the 60s, also in 2024. Stratolaunch was created by Microsoft co-founder Paul Allen in 2011. It initially developed ROC as an air launch aircraft to get rockets into orbit. But following Allen's death, the company was sold in 2019 to private equity firm Cerberus Capital Management and has since shifted focus to hypersonic research. Stratolaunch is currently developing the Talon A vehicle to fly at Mach 5, or five times the speed of sound, or greater, for testing purposes for the U.S. Navy and others. On this episode, Stratolaunch CEO Zachary Krever discusses the recent milestone,

the total addressable market for hypersonic testing, and the acquisition of now defunct Virgin Orbit's Boeing 747 aircraft. I'm Morgan Brennan, and this is Manifest Space. Zach Krever, Stratolaunch CEO, thank you so much for joining me again on Manifest Space. It's great to have you back. Absolutely. Thanks for having me, Maureen. You've been very busy, especially here in these final weeks of 2023. I want to start with the successful captive carry flight you just recently did for the TA-1 test vehicle. How did that go? Excellent. We were really thrilled with the results. What we were focused on is

ensuring that that test demonstrated that we are getting ready to release our hypersonic vehicle known as TA1. It's the Talon vehicle. And so really very pleased with the results. We're finishing off the data review now and we'll determine our final steps to get us to our first powered flight in 2024 and then moving on and establishing reusable hypersonic capability in this country, something we haven't had since the 60s, also in 2024. So 2024, that's the timeline. Do you have any sort of sense then in terms of when you're going to target this first powered flight having just had the successful captive carry? Yes, it'll certainly occur in the first quarter.

The exact timeline will be determined based on finishing off that data review and seeing what additional testing we might want to do. And also, of course, working with our customers. We have two different customers on that first flight. They're getting a screaming deal. And so we want to make sure that they feel they're getting that value. So we'll work with them to establish that time. A screaming deal. That's very strong language. But in all seriousness, we are very appreciative to have customers on this first flight who understand that it's the first flight of a brand new aircraft, a rocket powered airplane. And there is a little bit of risk regarding potential outcomes. I want to take a little trip through history because you mentioned something before that I think is very meaningful. And that's the idea that this country has had reusable hypersonic flight capabilities in the past, but it's been many

decades since we've seen that. What was it used for the first time? Why did it go away? How does it get used now? Yes. So it was the X-15 program was our last use of a hypersonic vehicle. 199 flights overall, a number of those over 100 above Mach 5. And that was really establishing a hypersonic data set in this country. What did it mean to go hypersonic? What physical phenomena were you actually seeing? Then we started to dissipate in this country as we focused on other technologies, getting to orbit, regularly getting humans to orbit, establishing space

stations, of course, going to the moon, and then continue to focus on that exploration and on the defense side, a variety of technologies, for example, most recently stealth technology, and making sure that we had that capability. However, what's happened is some of our peer competitors now have established hypersonic capabilities. They've been demonstrated, certainly Russia and Ukraine, unfortunately, and then also China with their around the world hypersonic test, again, publicly acknowledged in 2021. And so now the United States is facing a situation where the capabilities are asymmetric on the global stage. And so we are racing to make sure that we have a comparable hypersonic capability to these other peer competitors. Of course, where does Stratolaunch fit into that? What does this mean in terms of a market

opportunity and the capabilities you bring to the table? Yes. So Stratolaunch is a hypersonic technology accelerator. So what that means is we take technologies, we put it on our rocket powered airplane, and we demonstrate them in the hypersonic environment to ensure that they work. Technologies that go on our offensive and defensive weapons systems in the hypersonic regime. And so we're looking at a $4.7 billion unclassified budget hypersonics that was enacted in FY23. All of those programs, whether it's hypersonic technology development, the hypersonic, the counter hypersonic, hypersonics, the defense against hypersonics, and certainly some of

the offensive hypersonic programs such as the hawk program or arrow those all need testing those all need demonstration capabilities congressional research services recently put out a report that cited every hypersonic test is costing 100 over 100 million dollars in this country this is where straddle launch can fit in stradolaunch offers those tests for an order of magnitude reduction in price while also getting the technologies back so they can be reused, reflown quickly, and that's how we can accelerate the hypersonic technology in this country. So you can do a flight test for less than $100 million. How much less?

Yeah, so we can't reveal the exact pricing due to the competitive nature of it but as mentioned it's an order of magnitude uh lower and we're getting a lot of traction as evidenced by a recent contract a five flight block by four flights in 2024 under what's called the mock tv program where we are a subcontractor to Dynetics doing work for Navy Crane. And so you're going to see this first, you're targeting this first powered flight. And then to your point, you talked about the mock TV program. If that goes according to plan, then you're going to be doing as many as four additional flights next year for that program specifically for the Navy? That's exactly right, Morgan. And those will all be reusable hypersonic

flights. So we're really excited to partner with the Western Range Space Launch Delta 30 so that we land at the Vandenberg Space Force Base. And then we will turn around and continue to do those flights in 2024. Do you have other customers or other deals in the pipeline? Yes, we are working with a variety of different customers. There's a number of folks who need hypersonic test capability, everyone from Missile Defense Agency, Space Development Agency, of course, all the typical primes working on the programs of record. That's the point. Everyone needs testing. That's how we go faster. The Pentagon put out a call where they want to do hypersonic flight testing

once a week. And in a key meeting led by Secretary of Defense Lloyd Austin said they specifically need to test more often to really accelerate hypersonics. And so that's why there's been some market research studies putting out that the overall budget in hypersonics. And so that's why there's been some market research studies putting out that the overall budget in hypersonics could grow to as high as $13 billion in 2030. And so we're just really excited about the opportunity for not only our company, but also what it's going to mean for this nation

to again, gain that hypersonic capability that we need and then to accelerate ahead of our peer competitors. We've seen other competitors kind of come into this space, or what I would assume are competitors. I guess you tell me whether they're direct competitors or not, whether it is Rocket Lab announcing its own hypersonic testing program or some of the others that have come about. I guess, how would you categorize or characterize the competitive landscape now? Yes, maybe I'd characterize it, Morgan, to use a little colloquial term as frenemies. So what's really clever, what the government has done is they have

contracted with us, Rocket Lab, a number of other companies under Mach TV, where we can all fit in different regimes of the hypersonic flight regime. So for example, hypersonic starts at Mach 5, but it also includes going Mach 15. Stratolaunch is focused on the market, let's say Mach 5 to Mach 7, offering a bunch of value there. But there's other folks who are going Mach 10, Mach 15. And so what the government has done is ensure that they have a suite of solutions to provide test capabilities all in that market. And if you think about the market as a pie, it's not maybe a tiny single serving pie. We're talking Costco-sized pie here. And so there's a lot of slices available for everyone. And as evidenced, too, by that potential growth that we'll see through 2030.

I mean, with Stratolaunch, you're synonymous for folks that follow space and aerospace and have followed the company over the years with ROC, the big mega plane that you use, aircraft that you use to do these launches, or will be using to do these tests. You and I, the last time we spoke, you had picked up some assets from Virgin Orbit. What is that going to do to increase your capacity? Yes, we're ecstatic about that. And thanks for asking. We are going to double, essentially double our capacity. And so right now, ROC, great aircraft. We are focusing on flying that aircraft over the western range. So again, in our backyard, landing at Vandenberg. However, we've seen that demand, and some of these hypersonic tests that you've referred to, for example, from Rocket Lab,

have occurred in other parts of the country. And again, when you look at that pie and that slice, there are folks who need testing for our capabilities, but they need it over the East Coast, or they need it in the Gulf Ranges, or actually they need it in some international locations, such as Australia and the Womera test range. That 747 allows us to serve the customers that we have who want to test and fly over the Western Range, but also then serve customers who have these international requirements or these East Coast and Gulf Coast requirements. multiple locations around this country. Really the best analogy I can think of is we have launch pads right on the east coast, launch pads on the west coast. Now Stratolaunch has multiple launch pads around the country. Have you flown it? Has Spirit of the Mojave, this Boeing 747 that you've acquired from Virgin Orbit, has it been flying as well? Yes, it has been. We're really excited. Actually,

we already have four flights under our belt and right now that aircraft is sitting in front of our hangar starting its modification program. There's a customer who's already contracted to use that aircraft. And so we're starting the modification set and Spirit of Mojave will perform its first mission in mid to third quarter of 2024. I just want to circle back, just a question on the actual technology itself. When you talk about the reusability aspect of your test vehicles, how do you enable that? And what is that going to, because you've got the TA1 test vehicle, but you've got others, newer iterations that you're developing as well. So how is that going to evolve? Yes, exactly. And that is we basically build upon a test program. So the key for the reusability, which provides that value to the customers, is the fact that you built in that reusability in

your design requirements from the start. So what does that mean? That means we add capabilities so that these components, say a flight computer that controls our vehicle, or maybe an actuator that does the control surface movements, they are purpose-built to survive a number of flights in the flight environment. And then we test that capability to ensure it has that lifetime. And so that's how you can do that purpose-built reusability, which allows us to really offer great value in terms of both getting the payload back and an affordable price.

And so that is what, that is 2024 is about demonstrating that reusable hypersonic flight. Okay, we're looking forward to 2024 then. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.