An uncertain future for bankrupt Sea Launch
BY STEPHEN CLARK
Posted: July 30, 2009
Already burdened by bankruptcy and a cutthroat rocket industry, Sea Launch could face more defecting customers if the company does not soon assure satellite operators of its future viability.
Sea Launch and five affiliated businesses filed for Chapter 11 Bankruptcy protection June 22 in a Delaware court.
Intelsat owns seven of 10 contracts in Sea Launch's backlog.
Two Intelsat payloads will fly on Sea Launch's land-based subsidiary and one spacecraft is manifested on Sea Launch's ocean-based service. Intelsat holds up to four contract options for additional launches through 2012, but those agreements do not have assigned satellites, according to Paula Korn, Sea Launch spokesperson.
Sea Launch has informally assured Intelsat it will carry out the launches, but Intelsat is demanding a formal commitment before making additional advance payments on the three assigned launches, court filings show.
When Sea Launch filed for bankruptcy, the company indicated it desired to continue operations during reorganization. Sea Launch still hopes to emerge as a viable launch provider, officials said.
"Sea Launch continues to work with its customers within the bounds of the Chapter 11 process. We cannot speculate on this process," the company said in a written statement to Spaceflight Now.
"Our customer community continues to express support for our emergence from reorganization and our continued operations," the statement said.
But some Sea Launch customers are lukewarm about the firm's future in the commercial launch industry and will not rule out considering back-up rockets for their satellites, according to industry sources.
Other missions planned by Sea Launch include the Eutelsat W7 communications satellite, Sirius XM Radio's next broadcasting spacecraft, and eight Internet networking payloads for O3b Networks of the Channel Islands.
O3b recently cancelled plans for a second launch when the company downsized its satellite fleet, Korn said.
The W7 satellite is up next for Sea Launch, scheduled for liftoff some time in November.
W7 remains on Sea Launch's manifest for now, but the European firm regularly explores back-up launch options in scenarios like this, according to a Eutelsat spokesperson.
"Our objective is to deliver the satellite into orbit at the earliest opportunity for our clients," the Eutelsat spokesperson said.
Intelsat officials believe Sea Launch is committed to supporting their business, but the communications firm has flexibility in future plans to avoid outages, according to an Intelsat spokesperson.
"Overall, we have procured more launches and options than are required for our satellite program," the company said in a written statement. "This gives the required option to address situations such as this."
Intelsat would not say if they are in negotiations with other launch providers.
Eutelsat and Intelsat have both already moved other satellites from Sea Launch to Proton and Ariane rockets, the company's two chief competitors in the commercial rocket business.
Two satellites, Eutelsat W2A and Intelsat 16, were most recently moved to the International Launch Services Proton booster to meet the customers' schedule needs.
W2A successfully launched in April and Intelsat 16 is slated for liftoff by the end of 2009, a year before Land Launch could have delivered the satellite, according to ILS.
Other satellite operators have also switched their payloads between the three launch providers, primarily due to schedule requirements.
Sea Launch has suffered delays in deliveries of critical rocket equipment for upcoming flights, postponing some of the launches longer than customers were willing to accept.
Partners in Ukraine, Russia and the United States provide hardware for the Zenit 3SL rocket.
Sirius XM Radio and O3b Networks would not respond to questions on their plans.
Sea Launch has not inked a new contract since Intelsat agreed to five launches in a multiple flight contract last November. One of those commitments was assigned a satellite in January.
The most pressing issue for Intelsat is the launch of a communications satellite in November. The company owes its next payment soon for Intelsat 15, which is scheduled to fly on a Land Launch Zenit 3SLB rocket from the Baikonur Cosmodrome in Kazakhstan.
"Unless the debtors (Sea Launch) are compelled to immediately assume or reject the launch contracts, Intelsat may be obligated to make those future payments without any assurance that the debtors will perform their obligations under the launch contracts," said a document filed July 22 on behalf of Intelsat.
The bankruptcy court will consider the motion during an Aug. 11 hearing.
Korn said the Intelsat motion is common in bankruptcy proceedings. She would not indicate whether Sea Launch will affirm or reject the contracts but verified the Intelsat 15 and W7 satellites are scheduled for launch late this year.
Sea Launch officials would not say if hardware for the missions will be available to support the scheduled launch dates.
"We have many areas of discussion underway with our partners (and) the bankruptcy court," Korn said.
Specific monetary figures, including the amount of Intelsat's "most imminent" payment, were redacted from public records.
Two other Intelsat payloads are booked on Sea Launch. Intelsat 17 is slated to launch from the company's mobile platform in the Pacific Ocean, while Intelsat 18 will fly on Land Launch.
In the filing, Intelsat also requested the court to allow the operator to begin making Land Launch payments directly to Space International Services, Sea Launch's Moscow-based partner in the venture.
Intelsat believes Sea Launch's commitment to future contracts "would be in the best interests of the debtors, their estates, their creditors and their customers," according to the July 22 filing.
Industry officials say there is "considerable uncertainty" about Sea Launch's future. Formally reaffirming the company's commitment to continue normal operations would be a signal that Sea Launch intends to remain a contender in the launch market, the Intelsat filing said.