Wealthy magnate Michael Bloomberg expresses ambition to squash Boeing's space aspirations
Is Boeing's (BA 4.98%) largest space venture potentially a colossal waste of resources? That's the question billionaire Michael Bloomberg, founder of Bloomberg Financial News, posed (and answered) in an opinion piece published on Bloomberg last month.
And his reply was affirmative.
Boeing's most substantial space endeavor
In this context, I'm referring to Project Artemis, NASA's ambitious objective to return astronauts to the moon for the first time since 1972. At the heart of Project Artemis lies the mammoth Space Launch System (SLS) rocket, which NASA intends to employ for transporting astronauts to the moon and back.
Boeing serves as the primary contractor for SLS, but space corporations such as Northrop Grumman, L3Harris, and Lockheed Martin also hold supporting roles. Given its future estimated cost exceeding $82 billion, SLS undeniably remains Boeing's most substantial space venture.
However, according to Bloomberg, SLS isn't merely substantial. It's overly so. The project is excessive and should be abolished.
The predicament with SLS
NASA has already invested nearly $24 billion in developing the Space Launch System, contends Bloomberg, without any astronauts having achieved lift-off. To date, SLS has only made one launch – on the Nov. 16, 2022, Artemis I mission – which was commissioned remotely. Moreover, costs are escalating.
Each time an Artemis SLS mission is underway, it costs NASA another $4 billion. Bloomberg highlights that this is "four times the initial estimates." Across the 20 proposed launches, SLS could generate $82 billion or more in revenue for Boeing – equivalent to more than three full years of revenue for Boeing's entire defense, space, and security division, according to data from S&P Global Market Intelligence.
The problem is, the immense price tag of SLS apparently does not provide the intended capability.
Given the lack of power to reach the moon alone, SLS necessitates building a $5 billion Lunar Gateway space station in lunar orbit, allowing for docking and crew transfer to a lunar lander for descent to the moon. And to place the Lunar Gateway in lunar orbit initially will demand expensive modifications to the existing SLS.
The "Block 1B" version of the rocket, asserts Bloomberg, will be more expensive than the original SLS recipe, costing $5.7 billion. Additionally, a special "ML-2" tower must be built to launch it, adding $2.7 billion (which is "over seven times the initial estimates") to the overall cost.
When summed up, Project Artemis, as presently planned, could potentially set America back "nearly $100 billion" – almost equal to Bloomberg's own net worth!
Bloomberg's billionaire's solution to a billion-dollar issue
Bloomberg labels it as "astronomical irony" that much of this spending is unnecessary, considering the advancements SpaceX is making with its Starship megarocket.
Last month, SpaceX successfully conducted a launch and landing of its Super Heavy Starship booster rocket powered by mechanical "chopsticks" which snagged the rocket as it descended to Earth. Then, barely a month later, SpaceX demonstrated in-space reignition of a Starship engine, leading to a successful water landing in the Indian Ocean. (Super Heavy also underwent a water landing, having been cancelled from an onshore capture attempt.)
Soon after, the Federal Aviation Administration granted SpaceX the authority to increment its launch cadence from Texas, rising from five to 25 flights per year – potentially accelerating further growth of the rocket. Moreover, Bloomberg noted in his piece that once SpaceX is prepared to commence work, SLS will "most likely" become irrelevant – alongside "Orion, Gateway, Block 1B [and] ML-2."
SLS versus Starship
Unlike Elon Musk, Michael Bloomberg is a billionaire without a space corporation or any specialized expertise in the field. It's unclear, therefore, how much leverage his opinions may have on U.S. space policy. Nonetheless, his arguments carry weight.
Consider: According to our estimates, it currently costs SpaceX approximately $90 million to construct one Starship. To transport Starship from low-Earth orbit to the moon and back requires building and launching eight other Starships, which would serve as refueling tankers for the initial Starship. Furthermore, each Starship launch requires around $1 million worth of fuel.
If these assumptions prove accurate, sending one Starship to the moon and back should cost less than $1 billion, as opposed to $4.1 billion for SLS. (To support these findings, SpaceX obtained two NASA contracts for purpose-built Starship lunar landers. The first will cost $2.9 billion, but the second costs significantly less – approximately $1.15 billion.).
Economic justification for canceling SLS now seems apparent; this is advantageous for taxpayers who might return America to the moon at a lower cost. However, it poses a potential revenue threat for Boeing, with its anticipated $82 billion revenue stream at risk.
Caveat investor.
In light of Michael Bloomberg's critique, some investors might question the financial wisdom of investing heavily in Boeing's Space Launch System (SLS) project, given its skyrocketing costs and uncertain benefits. Alternatively, they could consider investing in SpaceX, which is making significant strides in space exploration with its Starship megarocket at a potentially lower cost.
