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Analysts: Sea Launch Clients Waiting For Return To Flight

By | July 3, 2007

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      If Sea Launch suffered like a wallflower through last month’s Paris Air Show while fellow launch providers Arianespace and International Launch Services (ILS) took turns announcing contractual pas de deux with various customers, industry analysts believe its turn will come, at least after the company’s planned return to flight this autumn.
      In Paris, Arianespace announced the largest contract yet for the European space industry, announcing agreements for a multi-launch framework agreement with SES covering missions over a five-year time frame; taking orders to deliver each Arabsat 5, Thor 6, Rascom 1 and Insat 4G; and signing a preliminary order for production of 35 Ariane 5 launchers and four Soyuz rockets to be launched from Guiana Space Center. Subsequently, Arianespace’s backlog including Soyuz launches was sitting at 44 satellites, or three years’ worth of orders.
      For its part, ILS announced in Paris its signing deals for an Arabsat delivery and five of its own SES missions. Subsequently, ILS was holding a backlog of 21 satellites through 2013, including DirecTV-10 slated to be lofted on July 6.
      Sea Launch, meanwhile, has seemed quietly content to proceed toward its October target date to launch Thuraya’s Thuraya-3 satellite aboard a Zenit 3SL.
      That launch would mark Sea Launch’s first mission since a Jan. 30 catastrophic failure which claimed a Zenit 3SL booster and SES New Skies’ NSS-8 satellite.
      While Sea Launch had not responded to phone messages at the time of this article’s posting, indications nevertheless pointed toward the company’s returning to, if not yet business as usual, business as predictable.
      In May, Mobile Satellite Ventures (MSV) awarded contracts to both ILS and Sea Launch to launch MSV’s next-generation satellites designed to provide broadband wireless coverage of North and Central America.
      The ILS agreement is for a 2009 single firm launch costing $89 million, with a $93 million option for a second launch. The first MSV spacecraft is planned to launch aboard a Proton/Breeze M vehicle from the Baikonur Cosmodrome in Kazakhstan.
      Sea Launch’s contract is for a 2010 launch using a Zenit-3SL vehicle lifting off from a floating platform at the equator near the Pacific Ocean island of Kiribati. That deal is worth $86 million.
      Gary S. Sharpe, MSV’s vice president of investor relations and corporate communications, explained that “there were at least four bids solicited, and the combination of flexibility, affordability and reliability is what determined the contracts.
      “We have good confidence in both of them,” Sharpe added. “It’s an inherently risky business, but we are confident that given the time frame the return to flight isn’t even an issue for us.”
      Sea Launch has suffered losses beyond the ill-fated NSS-8. A contract from Hughes Network Systems for its Spaceway-3 communications satellite, originally booked for delivery in July, has since been rescheduled with Arianespace for early August. EchoStar Communications Corp. likewise rescheduled its satellite aboard an ILS Proton Breeze-M in 2008.
      In February, SES Americom announced that its AMC-21 satellite previously scheduled to be placed by Sea Launch’s planned Land Launch rocket would instead be delivered aboard an Arianespace Ariane 5 in the second quarter of 2008.
      Intelsat transferred the launch of its Galaxy-17 to Arianespace, which lofted it on May 4, but Intelsat nevertheless remains contracted with Sea Launch for delivery of Galaxy-18 and Galaxy-19 in 2008; it’s also booked two Land Launch deliveries for 2008 and 2009, respectively.
      DirecTV still expects to launch DirecTV-11 with Sea Launch for a delivery in 2008.
      Jeff Foust, a senior analyst with Futron Corp., said “I certainly think [Sea Launch] can turn around. They need to demonstrate a successful launch or two, and that they have worked out the issue which caused the failure, but with a successful flight they’ll prove it.”
      Foust explained “there’s enough demand that once the potential customers are satisfied that they’ve worked out those issues, they’ll sign up. Sea Launch got [the MSV contract] even though they’re still out of service right now. It’s just a matter of a return to flight. I can’t imagine it would take more than one or two launches, ‘cause they had a successful track record before.”
      Another analyst, Marco Caceres of Teal Group, also believed that the contracts will come, eventually.
      “That’s not all that surprising,” he said. “I don’t see anyone rushing to Sea Launch till they get one or more launches under their belt [because] if you want to get a satellite up in the next year or two, you want a team that’s operational. Sea Launch is essentially just trying to rebuild.”
      Caceres said that while the company will be smarting from its lack of business for six months while it conducted a failure review, “I assume if they launch a couple of times successfully by the end of the year, they’ll be back on target for next year.”
      On June 11, Sea Launch announced that its Failure Review Oversight Board (FROB) had concluded its review of the findings of an interagency CIS Joint Commission. The move essentially cleared all systems for operations, pending completion and tests of all repairs on the Odyssey Launch Platform, which is expected to be fully repaired by the end of the summer.
      “They have a good record,” Caceres added. “At the very least, those customers they’ve had will trust them in the future. My understanding is that they understood what went wrong, and it wasn’t a design failure. If it was a design failure, that usually takes time to correct, and has a high level of uncertainty.”
      Caceres concluded that “chances are [that] they’ll be fine next time. Rebuilding a platform is pretty basic stuff, not like avionics or a fuel system, something mechanical or in the guidance system. It was a freak accident.”

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