How NASA Saved Boeing's Space Program With a New Contract and $359 Million

So long, Falcon 9, we hardly knew ye.

Space Exploration Technologies (NASDAQ: SPCX) plans to phase out its Falcon 9 reusable rocket and the Crew Dragon capsule it uses to carry astronauts to the International Space Station (ISS). Falcon has flown roughly 700 missions since its introduction 16 years ago, the second-most-launched rocketship in history. However, as SpaceX makes progress with its next-generation Starship, the company has reportedly stopped taking orders for Falcon 9 launches after 2028 and will discontinue flights to the ISS after 2030.

So, what spacecraft will NASA use for missions to Low Earth Orbit when Falcon and Dragon are gone? The answer will (really) surprise you:

They'll use United Launch Alliance rockets and a Boeing (NYSE: BA) Starliner spacecraft.

Image source: Boeing.

Rehabilitating Starliner

Yes, you read that right: Starliner (not SpaceX's Starship).

As in, the same troubled Starliner spacecraft that failed to reach the ISS on its first attempt, barely got there on its second, and stranded astronauts on the ISS for months longer than they planned on its third flight -- the only time Starliner actually had astronauts on board!

NASA Administrator Jared Isaacman made this startling announcement in a press conference on Monday: "SpaceX intends to sunset older platforms like Falcon and Dragon as they concentrate on their next-generation capability, Starship." And for this reason, Boeing's "Starliner has an important role to play" as it fills the gap created by SpaceX.

Two years after a series of anomalies involving stuck valves, helium leaks, and thruster failures on Starliner forced NASA to send a SpaceX Crew Dragon to retrieve astronauts Butch Wilmore and Suni Williams from the ISS, NASA and Boeing insist they've made enough progress tracking down the problems and coming up with fixes to give Starliner another go.

NASA is therefore contracting with Boeing to fly Starliner at least five more times -- potentially as many as seven. The first flight, "Starliner 1," will be uncrewed and will put the spacecraft through its paces to ensure any issues are fixed. This test flight is expected to take place either in December 2026 or January 2027. After that will come an 18-month pause, followed by a crewed flight to the ISS in mid-2028, "Starliner 2."

And if all goes well, many more flights may follow, both to the ISS and later to one or more private space stations that NASA hopes will replace the government-owned International Space Station. As NASA Low Earth Orbit Program manager Dana Weigel said, once Falcon 9 and Crew Dragon are gone, "Starliner is what we're intending to fly into the future."

Rewarding failure

Boeing Commercial Crew program manager John Mulholland, also present at the press conference, pronounced himself "incredibly excited" at this prospect -- as well he should be!

After all, NASA has already paid Boeing $5.1 billion on a fixed-price contract for a Starliner that hasn't performed successfully even once. That's more than SpaceX has been paid for use of a Crew Dragon across 13 NASA Commercial Crew missions. (The 13th was scheduled to launch on Friday. SpaceX's payments through the final Crew Dragon mission, Crew-17, will total $5.9 billion.)

Nevertheless, to incentivize Boeing to remain in this space race and not walk away from Starliner (which it was reportedly considering), NASA said Monday that it will pay Boeing an additional $359 million to help remodel Starliner to address its identified problems. Add that to the tally, and Boeing will end up being paid $5.5 billion before making its first successful Starliner flight.

What this means for Boeing

That's quite a haul for Boeing, and it will go at least partway toward repairing the damage to Boeing's balance sheet from losses incurred on the Starliner program. Perhaps more important is what it could mean for Boeing's future.

SpaceX appears committed to retiring both the Falcon 9 and Crew Dragon. Starship, while a remarkable vehicle, is probably too big to dock with the ISS and take over Crew Dragon's role. There have been rumors of other companies (Blue Origin, for example) planning to design their own crewed space vehicles that could take Crew Dragon's place. But right now, Boeing's troubled Starliner is actually probably the spacecraft closest to being ready to fulfill that role.

Strange as it sounds, thanks to its archrival SpaceX's decision to abandon ISS work -- and a bit of extra assistance from NASA -- Boeing may once again have a future in space.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.