Northrop Grumman Warms Up to Firefly Aerospace -- With a $50 Million Investment

It's good to have friends (in space).

About three years ago, aerospace and defense giant Northrop Grumman (NYSE: NOC) was trying to build a space business and turn itself into a space company -- but it was encountering some difficulties. Lacking a full-size rocket of its own, Northrop Grumman had bought Orbital ATK and its OmegA large rocketship, which was under development. However, when the U.S. Space Force declined to use OmegA, that rocket program was terminated.

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Northrop did have another rocket it could use to put satellites in space for its customers. It was only a medium-lift rocket named the "Antares." But at least it was a rocket. The problem was that Ukraine built the first stage for Antares and Russia built the rocket engines. And in 2022, Russia invaded Ukraine. Ukraine could no longer build the first stage, and the U.S. banned import of new engines from Russia.

This made it kind of difficult to keep the Antares program going!

Image source: Firefly Aerospace.

Firefly to the rescue

Whatever would Northrop Grumman do?

Well, I'll tell you what Northrop did: It reached out to privately held space company Firefly Aerospace and asked if Firefly could build a new first stage for Antares -- and if Firefly wouldn't mind then keeping on building, and helping Northrop develop an entirely new rocket to replace Antares.

Firefly agreed to both requests, and a beautiful (space) friendship was born.

For the last few years, this friendship has continued, as the two companies worked together to develop new Miranda engines for Antares, and a new Medium Launch Vehicle (also powered by Mirandas) for the two companies to operate jointly. And now, it's time to kick the MLV program into high gear, and also give it a new name.

Introducing the Eclipse rocket

Late last month, Firefly announced that Northrop Grumman has invested $50 million into accelerating the development of the new rocket, to be renamed "Eclipse."

Incorporating elements of Northrop's Antares and Firefly's smaller Alpha rocket, the larger Eclipse will boast a 5.4-meter payload fairing -- the same size as the fairing on United Launch Alliance's Vulcan and 0.2 meters larger than the fairing on the SpaceX Falcon 9. Eclipse's 16-ton payload to Low Earth Orbit will be less than either of those other rockets but twice the 8-ton payload of Northrop's previous version of Antares and much more robust than the 1-ton payload of Firefly's Alpha rocket.

Development of the rocket is approaching completion, allowing Firefly and Northrop to posit a first launch date "as early as 2026." The rocket will launch out of Wallops Island, Virginia, the same location from which Northrop launched its previous Antares rockets and, incidentally, the same location from which Rocket Lab will be launching its new Neutron rocket (hopefully later this year).

Firefly and Northrop hope to use Eclipse for a variety of government and commercial missions to LEO, MEO, GEO, and TLI (i.e., missions to the moon), including space station resupply and also National Security Space Launch (NSSL) "Lane 1" missions for the Space Force.

What does this mean for Northrop Grumman -- and for Firefly?

It's hard to overestimate how important this relationship is for Northrop Grumman, which hasn't been able to use its own Antares rockets to perform Commercial Resupply Services (CRS) missions to the International Space Station under its NASA contract since 2023. Instead, the company has had to mount its Cygnus resupply ships on SpaceX Falcon 9 rockets -- piggybacking on a competitor for the CRS contract.

One imagines that isn't doing anything good for Northrop's profit margins on CRS.

Getting Eclipse up and running and finishing the redesigned Antares should also help Northrop to compete for lucrative Pentagon contracts under NSSL -- which was the original goal of buying Orbital ATK and its OmegA rocket all those years ago!

But what about the implications for Firefly?

As a privately owned company, still months (or years?) away from an IPO, it's not easy to nail down financial specifics on Firefly. We do know that the company recently ran a funding round that valued Firefly stock at $2 billion. Data from S&P Global Market Intelligence estimates the company's annual revenue at $159 million. Other sources provide even more optimistic estimates -- anywhere from $360 million (according to Growjo.com) to as high as $750 million (according to LeadIQ).

And, of course, no one has any clue whether Firefly is profitable yet.

Depending on which revenue estimate is closer to the mark, Firefly might not actually need financial support from Northrop Grumman at this point. That doesn't mean they'd turn down the money, of course. It does, however, suggest that rumors Firefly might be for sale. Any suspicions that Northrop Grumman might be a bidder are probably still unfounded.

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Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.