Frank McKenna, President, ILS

 

Via Satellite: So the loss of the mutual backup marketing plan has not hurt ILS?

McKenna: There was a lot of hype around mutual backup strategies and we maybe sold one or two of those on that basis, but it was very few in terms of the larger scheme of things. Quite frankly, the backup type programs that the competitor has set up have not worked either. If you ask the operators, most prefer to create diversity in their launch procurements on their own without having a single supplier figure out how to do that for them.
Most companies have the capability to handle the situation, and mutual backup did not turn out to be a very good marketing strategy. I think customers really do prefer a focus on performance and on the product that you have. There is significant demand for on-time reliable launching, and the customer wants the flexibility to procure different types of spacecraft for different missions. We have found that model works the best and actually satisfying the largest operators who want a mix of spacecraft for their needs.

Via Satellite: Will the contract you signed with SES Global become the standard for how large operators work with launch providers?

McKenna: I think it’s a very unique idea that is developed by SES over the last nine months or so, but it has its roots in several things they did for risk management three or four years ago in terms of creating flexibility to launch their spacecraft in the event there is a satellite delay or launch vehicle mishap. They looked at their fleet management over a period of five years and did something about it, putting in plans to meet their requirements. They realized the old methods of doing business really are not as well-suited for their needs, and they are large enough and financially strong enough to do this. This is a unique, good approach for maintaining their revenue growth over the next five years.

What we’ve seen in the consolidation, and said this three or four year ago, is that it will strengthen things, and I think it has. With a few exceptions, we have not seen a cutback in the capital expenditure plans for the major operators. In contrary, we have seen a lot of diversity in growth in what they have been ordering. We’ve seen it across the board, and I don’t really see anybody retrenching.

Via Satellite: How will the restructuring of the Russian space industry affect your supply of Proton vehicles?

McKenna: Planning for this started a couple of years ago, and a decree that authorized this was signed Feb. 3, 2007, allowing Khrunichev to fully vertically integrate every element of the Proton launch system — the core vehicle, the engines, the avionics and the upper stage — is now in control of Khrunichev. This will be good for cost reduction, management and schedule control. They have increased their production rate to meet six commercial launches and another three to four federal launches this year. The hardware supply is very robust and meting demands for system.

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