WASHINGTON United Launch Alliance, a joint venture of Lockheed Martin Corp (LMT.N) and Boeing Co (BA.N), on Friday said it was cutting its executive ranks by 30 percent in December through what it called voluntary departures by 12 executives.
Tory Bruno, chief executive of the venture, told Reuters in an emailed statement the layoffs were part of ULA's ongoing efforts to adapt to what he called "an increasingly competitive business environment" and redesign its leadership team.
ULA, formed by the two largest U.S. weapons makers in 2006, has long been the sole company able to launch U.S. military and intelligence satellites into orbit, but the Air Force expects to certify a new rival, privately-held Space Exploration Technologies, to compete for some of those launches next month.
The company is also under pressure from a new law that limits its use of the Russian RD-180 rocket engines that power its Atlas 5 launch vehicles after 2019. Congress passed the law after Russia annexed the Crimea region of Ukraine last year.
"ULA's back is to the wall," said defense consultant Loren Thompson. "Unless it gets relief from the congressional mandate on getting off Russian rockets and it can't speed up its alternative, then its business model is severely impaired."
Bruno told Reuters last month that Boeing and Lockheed could halt investment in a new U.S.-powered rocket unless the company got permission to use a number of Russian engines ordered but not paid for before the invasion of Crimea.
Without those engines, ULA would be unable to compete for some critical Air Force launches between 2019 and 2022, when the new rocket is expected to be certified.
Bruno announced the layoffs internally on Wednesday in what some employees have dubbed the "Mother's Day Massacre," given its timing just after the holiday last weekend.
"It is important for ULA to move forward early in the process with our leadership selections to ensure a seamless transition and our continued focus on mission success," Bruno said in response to a query from Reuters about the layoffs.
He thanked the 12 executives for their dedication and said they would leave the company on Dec. 31 to ensure a seamless transition period with the new organization.
The names of the departing executives were not immediately available. It was unclear what kind of incentives they got to leave voluntarily.
Bruno was named to replace Michael Gass as chief executive and president of ULA in August, shortly before the company announced it was teaming with entrepreneur Jeff Bezos to develop a new launch vehicle powered by a U.S.-built engine.
Bruno told Reuters in an interview in February the company would slash costs and hunt out new customers to ensure continued growth despite the rise of its new rival,
He acknowledged questions about whether the company could generate enough revenues and profits to keep both its shareholders happy, but said he planned to transform the company by halving the cost and cycle time of current launches.
The management layoffs marked the beginning of a major reorganization and redesign, company officials said.
(Reporting by Andrea Shalal; Editing by Diane Craft and Christian Plumb)