Astra Announces Pivot from Their Business Model

Astra seemingly burst onto the launch scene a few years ago with a bold vision and different sort of approach to the launch business.  It would build cheap launch vehicles and cycle through them quickly.  Instead of sparing no expense to ensure highly reliable vehicles, they assumed their small satellite customers would accept a bit more risk, so they could cut down on their testing, analysis, and redundancy in design.  In return, Astra would pass those launch savings along to customers.  Astra co-founder Adam London had said, "it's a no-brainer from an economics perspective that for these kinds of payloads, you should not be targeting 100 percent reliability," back in February of '20.

It hasn't quite worked out that way. 

At the time London said that, the company was working on their Rocket 3 vehicle, a micro launcher said to be capable of putting small payloads of about 50 kg into low Earth orbit. That rocket exploded within one month during a wet dress rehearsal test on the launch pad.  

Since then, Astra has attempted seven launches of its Rocket 3 vehicle. Only two of these seven flights were successful. Particularly embarrassing was the company's most recent launch of Rocket 3 two months ago, when the upper stage shut down early, failing to put two tropical activity monitoring satellites into orbit for NASA.

While customers might well settle for a bit less reliability in exchange for a more affordable launch, they probably envision something like dropping from 99% reliability to 90%, not 29% like this.  

Given all of this, Astra on Thursday announced a reset of its plans moving forward with regard to launch activity. The most recent failure appears to have catalyzed Astra to move in a new direction. In short, Astra will shift away from its previous mantra of being lean in terms of staffing, moving at breakneck speed, and being willing to tolerate failure in launch vehicles. It will also be going bigger in terms of its rocket size.
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"We've made a few key decisions," [CEO Brian] Kemp said. "First, we've increased the payload capacity target for launch system 2.0 from 300 kg to 600 kg. Second, we're working with all of our launch service customers to re-manifest on launch system 2.0. As such, we will not have any additional flights in 2022. And third, we're increasing investments in testing and qualification which will add additional time and test flights to our schedule prior to resuming commercial launch operations."

This is more confusing if you're not familiar with Astra, but they're abandoning the Rocket 3 program and moving to what they've previously called (are you ready?) Rocket 4 - but which will also be called Launch System 2.0.  They're going to the 600 kg payload largely in effort to appeal to the companies trying to put up mega-constellations.  Elsewhere, Eric Berger at Ars Technica was able to determine the projected cost is $5 million for a Rocket 4 mission.  That puts Rocket 4 at about double the payload capacity of Rocket Lab's Electron vehicle at two-thirds the price.  

Rocket Lab isn't standing still, of course; they're developing the Neutron launch vehicle to compete with the Falcon 9.  SpaceX isn't standing still either, of course.  Competition is good, of course.  

The question, of course, is whether they can pull this off.  Not just the talent pool but the funding (which is easier to get information on). We know they say they've tripled the size of their workforce; we don't know if the people hired can accomplish what Astra needs.

It is not clear whether a larger Astra has the finances to survive one to two years of development work. Astra reported a net loss of $168 million during the first half of 2022, with revenues of just $6.5 million. Meanwhile, the company has cash and marketable securities of about $200 million on hand.

To reach the point where it can start launching Rocket 4, Astra will probably need to raise additional money, trim expenses, and increase sales of its other main product, the "Astra Spacecraft Engine," an in-space electric propulsion engine. The company says it has started delivering these engines to customers, but it offered few details on potential revenue from these sales.

Rocket 3.3 before the TROPICS mission in June.