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Allen, 58, is hoping his new company -- called Stratolaunch Systems -- will launch unmanned rockets from a flying carrier plane to ferry government and commercial payloads into space and back, and eventually evolve to human space missions.
Allen's rocket will be launched from a massive carrier aircraft powered by six jumbo jet engines, to be constructed by Scaled Composites, a unit of defense contractor Northrop Grumman Corp. The rocket itself will be made by private space company SpaceX, founded by Elon Musk, the billionaire co-founder of PayPal.
The first test flight is targeted within five years.
"I have long dreamed about taking the next big step in private space flight," said Allen in a statement. "To offer a flexible, orbital space delivery system."