In 2024, Russia plans to abandon the International Space Station.
That was the headline that shocked the space community this week, when Russian news agency TASS quoted new Roscosmos Chief Yuri Borisov saying that Russia will "withdraw from this station after 2024" and attempt to build a new, all-Russian space station instead. But perhaps investors should be looking at this less like a surprise, and more like ... an opportunity?
The writing on the wall
After all, when the International Space Station (ISS) began operating in 2001, it was expected to remain in operation for about 15 years. It's 2022 now, so obviously that initial plan has been revised. Still, as far back as 2016 (ISS's original "expiration date"), Russia was already making noises about wanting to abandon the project, detach its modules, and use them as the basis for a new, all-Russian station.
Continual negotiation between the U.S., which wants to use ISS to train private companies to build their own stations, and Russia, which up until 2020 was making a good business selling "seats" on Russian rockets, has extended ISS's lease on life -- first through 2025, then 2028, and most recently all the way out to 2030. But ex-Roscosmos boss Dmitry Rogozin has complained that ISS costs "colossal money" to maintain, and the Russian government has been saying for years it would prefer to spend its money on a wholly owned Russian station, to be named the Russian Orbital Service Station (ROSS).
Now, with the advent of Russia's war on Ukraine and the arrival of a new "cold war" mentality in the U.S. and Russia, Russia may be ready to call it quits on ISS. (Or it may not. A separate Reuters story that followed the TASS report by mere hours cited other Russian officials saying Russia might stick with ISS through 2028.)
An opportunity in space
If Russia does jump ship, it isn't necessarily the end of the mission While a multinational effort comprising elements provided by the United States, Russia, Japan, Europe, and Canada (roughly in that order), the bulk of ISS belongs to the U.S. In fact, only about 17% of the space station's mass is "Russian." But the most important part of that 17% is the station's Zvezda ("Star") service module, which is the engine of the station that enables it to maintain its orbit and maneuver around space junk.
If and when Russia abandons ISS -- taking Zvezda with it -- that's the part that NASA must replace if it wishes to keep ISS in operation through 2030. And this could be an opportunity for companies that can capitalize. If Russia does leave ISS, NASA could be forced to rush out an award to a U.S. company to take over Zvezda's role. Several names suggest themselves as candidates for this role -- and potential recipients of a NASA contract to build a Zvezda replacement.
SpaceX is probably the name that leaps first to mind. Elon Musk's pioneering space company has proven itself adept at solving all sorts of space problems, from reusable launch rockets to communications satellites to moon landers. SpaceX is, however, a private company, offering investors little chance to profit from it even if it wins an ISS contract.
Fortunately, two other publicly held space companies are more attractive. Boeing (BA 0.97%), for example, served as NASA's prime contractor in building ISS in the 1990s and 2000s and probably knows ISS better than anyone else. Boeing also now has a flight-proven, (almost) human-rated spacecraft -- the Starliner -- that's capable of reaching ISS and using its engines to course-correct the space station as an ad hoc engine, while working on a more permanent solution.
Another publicly traded space company that would have a good shot at winning a Zvezda replacement contract is Northrop Grumman (NOC 0.98%). Like Boeing's Starliner, Northrop's Cygnus supply ships can reach ISS -- and in fact, NASA has plans to try using Cygnus's engines to course-correct ISS on a future flight, to test out this option.
Northrop even won a contract to build a habitation module for NASA's planned lunar space station, the Lunar Gateway, basing its design on -- what else? -- a Cygnus supply craft. And if NASA thinks Northrop is qualified to build modules for its new space station, it stands to reason Northrop would be first in line to win a contract to build new modules for NASA's old space station as well.
Right now, it's hard to say how serious Russia is about exiting ISS ahead of schedule. But if it does leave, given the ambitious plans several space companies have announced in recent years to build their own space stations -- but to first practice space station operations and procedures aboard ISS -- I think there's a good chance NASA will seek an interim solution to keep ISS flying for a few more years.
If that proves to be the case, Boeing and Northrop (and SpaceX) are all prime candidates to benefit from a new ISS contract.