Rocket Lab Suffers Launch Failure as Competitive Pressures Mount and Merger Looms

by Douglas Messier
Managing Editor

Rocket Lab suffered its second launch failure in less than a year on Saturday as an Electron booster’s second stage appeared to tumble out of control immediately after its engine fired. Two optical Earth observation satellites owned by U.S.-based BlackSky were lost in the accident.

Rocket Lab’s third launch failure in 20 launches comes at a delicate time for the dedicated small satellite launch provider. Rocket Lab is in the midst of going public by merging with a company already listed on the nasdaq stock exchange. The merger will provide about $800 million that Rocket Lab needs to develop a larger booster to address competitive threats posed by smallsat launch rivals and Elon Musk’s SpaceX.

SpaceX has soaked up hundreds of small satellites that are Rocket Lab’s core business with its Transporter rideshare mission, which uses the company’s highly-reliable Falcon 9 booster. In January, SpaceX launched a world record 143 micro- and nanosatellites for commercial and government customers. Elon Musk’s rocket company has scheduled the Transporter-2 launch for July. SpaceX has at least two other Transporter rideshare missions on its manifest over the next year.

A direct Rocket Lab competitor, Virgin Orbit, succeeded in orbiting satellites with its LauncherOne booster in January. Billionaire Richard Branson’s air-launch company has scheduled another launch for next month. Virgin Orbit, which currently operates out of the Mojave Air and Space Port in California, has signed agreements to conduct flights from Cornwall in England, Brazil’s Alcantara spaceport, and an airport in the U.S. territory of Guam in the Pacific Ocean.

Firefly Aerospace is scheduled to conduct the maiden flight of its Alpha booster from Vandenberg Space Force Base in California later this year. Rocket Lab is also facing competition from other U.S. companies such as Astra, whose Rocket 3.2 reaching space but not orbit after launching from Alaska last year, and ABL Space, which plans to conduct the maiden flight of its RS1 booster in the coming months.

China has fielded a number of small satellite launchers, and India is scheduled to test a government-backed booster later this year. Three European start-up companies are also developing rockets aimed at the small satellite market.

Rocket Lab Founder Peter Beck once vowed to eat his hat if the company ever built a larger launch vehicle. In March, Beck published a video showing him doing exactly that as he announced plans to build the larger Neutron booster, which is aimed launching constellations of satellites and rideshare missions. Neutron will have a payload capacity of 8 metric tons (8.8 tons) to low Earth orbit.

Neutron booster (Credit: Rocket Lab)

To provide the funding required, Rocket Lab announced plans in March to go public by merging with Vector Acquisition Corporation, which is a special purpose acquisition company (SPAC) formed by Vector Capital. A SPAC is an investment fund that is already publicly traded. Once the merger is competed, Rocket Lab will begin trading on nasdaq under its own name.

The merger will provide Rocket Lab with up to $800 million. Vector Acquisition will contribute $320 million. An additional $470 million will be provided by a concurrent private investment in public equity (PIPE) round led by Vector Capital, BlackRock and Neuberger Berman. The deal is expected to close by the end of June.

Three failures in 20 attempts gives Electron a reliability of only 85 percent, which is low for the launch industry. Repeated launch failures drive away customers and raise insurance rates. In turn, discounts provided by launch providers to keep existing or lure new customers cut into revenues.

Rocket Lab’s first failure occurred in May 2017 on Electron’s maiden launch. The rocket was flying normally, but the range safety officer destroyed it after the booster lost contact with controllers due to a software error in ground equipment.

The failure was not considered that serious because the rocket performed as planned and actually reached space before the range safety officer destroyed it. Failures on maiden flights are not unusual in the launch industry.

Electron’s other two failures are more serious because they occurred during operational missions. Last July, seven satellites were lost due to the premature shutdown of the rocket’s second stage. The Investigators said a faulty electrical connection cut power to the turbopumps feeding fuel to the second stage’s Rutherford engine.

As engineers sorted out the cause of Saturday’s failure, Beck sought to reassure customers and investors.

“We are deeply sorry to our customer BlackSky for the loss of their payloads. We understand the monumental effort that goes into every spacecraft and we feel their loss and disappointment. Our team is working hard to identify the issue, rectify it, and be safely back on the pad as soon as possible,” Beck said in a statement.

“On one of our toughest days, our team operated with professionalism and worked swiftly to ensure the anomaly was managed safely. Our team is resilient, and our top priority remains to safely and reliably return to flight for our customers. We will learn from this, and we’ll be back on the pad again,” he added.