- Associated Press - Wednesday, February 11, 2015

JUNEAU, Alaska (AP) - The president and CEO of Alaska Aerospace Corp. said Wednesday that the state-owned corporation would like to become a private company.

Craig Campbell told the Senate Finance Committee he does not believe shutting down the corporation and the Kodiak Launch Complex that it owns and operates would be a good decision, given the investment that’s been made and the future opportunities. He also said if the state put the facility up for sale, as some have suggested, it would probably be disappointed in the response.

The privatization concept has been discussed with Gov. Bill Walker’s chief of staff and worked on over the last week or so, Campbell said. Privatization would allow Alaska Aerospace “to create value that sometime in the future would return the value the state expected in the first place,” he said.

There has been no private sector interest in buying the corporation and the launch complex, but there’s more to discuss regarding the idea of privatization, Campbell said.

In an interview later, he said he plans to bring up the issue of privatization at an upcoming board meeting.

“We need to have a stronger economic base to make a strong value for any sale that may happen in the future,” he said.

The chairman of Alaska Aerospace’s board of directors, Pat Gamble, told the committee it’s important for the corporation to get through the next few years.

“We either make it or we don’t,” he said. But he said the corporation sees real potential.

The state created Alaska Aerospace in 1991 to develop an aerospace sector for Alaska’s economy. Campbell said a mistake was to focus on launching small rockets. He said the corporation was not intended to be a Kodiak Launch Complex. The mission was to focus on aerospace development and work with the university system, he said. One step toward diversifying was a contract for distribution of Alaska geospatial imaging data from orbiting satellites.

The corporation also sees potential in helping provide support for programs like unmanned aircraft systems and long-range radar as part of an “aerospace integration complex” with other partners.

Campbell said the corporation has hit the bottom and is starting to come back up.

Walker ordered a halt to new spending on the launch complex and several other large-scale projects to allow time to review how, or whether, the state should proceed with them. This, as the state grapples with projected multibillion-dollar deficits amid the plunge in oil prices.

Campbell said the corporation has asked to be able to continue with development of a medium lift facility, not to exceed $3 million of a prior $25 million appropriation. The corporation offered back to the administration the remaining $22 million.

The corporation also is seeking the authority to be able to collect up to about $4 million from customers outside of state government. That amount had been requested as part of the budget for next year but was not included in Walker’s budget proposal, Campbell said.

Walker said the administration would continue to encourage the corporation to pursue privatization.

Senate Finance Committee member Peter Micciche, R-Soldotna, said the aerospace board may at some point come to a realization that it has difficulty attracting launch business to Alaska.

“I just want people to know that we are at least focused with the realization at some point that if we don’t succeed, we don’t plan on dragging this out for the long term,” he said.

Committee co-chair Pete Kelly, R-Fairbanks, said the corporation and launch facility speak to the idea of economic diversification and the state should be careful not to eat its “seed corn” during tight budget times.

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