By Andrea Shalal
WASHINGTON (Reuters) - Aerojet Rocketdyne Holdings Inc is on track to complete development of its AR1 rocket engine by 2019 as a replacement for the Russian-built RD-180 engine after receiving a funding "booster shot" from the U.S. Air Force, Chief Executive Officer Eileen Drake told Reuters on Tuesday.
Drake said the Air Force's $115 million contract for work on the AR1 prototype, along with options that could increase the government's investment to $501 million in coming years, moved the U.S. military a step closer to ending its reliance on Russian engines for national space launches.
The contract was awarded on Monday.
Drake said Aerojet was focused on winning a competition with Blue Origin, a Kent, Washington-based startup run by Amazon.com Inc founder Jeff Bezos, to develop an engine for a new rocket being developed by United Launch Alliance, a joint venture of Lockheed Martin Corp and Boeing Co.
The Air Force on Monday also awarded a $46.6-million contract to a partnership of ULA and Blue Origin.
"We remain laser-focused on completing the AR1 program and maximizing our competitive posture and increasing shareholder value," Drake said in a telephone interview. She said the company's 70-year rocket engine history made its engine project less risky and more likely to be completed on time than the competing one, despite ULA's expressed skepticism.
Aerojet completed a successful preliminary design review of the AR1 engine in December and is slated for another major design review at the end of 2016, Drake said.
"We definitely know that our timetable is doable," she said. "We know how to do this."
She said the company's overall health was strong, with a record $4.1 billion backlog and its recent win of a $1.1 billion contract from NASA helping to offset ULA's surprise decision last year to switch a large solid rocket motor contract to Orbital ATK Inc.
Drake said Aerojet was continuing to implement a "competitive improvement plan" aimed at cutting $145 million in costs by 2019, but was also looking for possible acquisitions to expand its portfolio, and increase its vertical or horizontal integration.
"We don't take our foot off the gas pedal on either one of them," she said.
Drake declined comment on the status of the company's unsuccessful merger talks with ULA last year.
(Reporting by Andrea Shalal; Editing by Paul Simao)