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SpaceX could slash launch costs by $20m

SpaceX has a full manifest of satellite launches including a craft for JCSAT (likely on May 3rd), a Eutelsat (117 WB) and ABS-2A which will launch together in late May, plus other planned satellites for Thaicom, Amos, and SES.

The Elon Musk-backed operation is likely to win a few more contracts following on from its successful landing a week ago of its rocket’s 1st stage, for refurbishing and re-use.  There are now reportedly a growing number of customers which would happily trust one of their satellites to one of these ‘second hand’ rockets, provided the price was right.

An April 25th report from equity analysts at investment bank Jefferies says that the ‘list price’ for a SpaceX Falcon-9 rocket is about $61.2 million. This price includes all the pre-launch campaign and the rocket’s fuel.

In March, SpaceX’s president Gwynn Shotwell was happy to quote a 30 per cent cost-saving on any mission where the first stage was reused.

Now the analysts have taken a close look at the financial fundamentals. Musk is on record as saying that the first stage itself absorbs about 75 per cent of the mission’s overall cost. Jefferies concludes that if a 40 per cent gross margin is applied to the launch business, then the first stage is costing about $27.5 million (out of the overall $61.2 million).

If SpaceX were to pass on to its clients around 50 per cent of the overall cost-saving then the list price would tumble to by some 21 per cent to $48.3 million. If SpaceX were to pass on 100 percent of the cost-saving then the list price of a launch would be slashed to just $37 million.

Jefferies admits that this set of problems still presents a suite of challenges, not least how would the insurance industry look at the use of a ‘pre-used’ rocket? But the bank says ‘the direction of travel is clear’.

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