Struggling ILS Shedding 25 Percent of Staff

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PONTE VEDRA, Florida — Commercial launch provider International Launch Services on Aug. 4 said it was cutting staff by 25 percent as it lowers its forecasted launch rate of Russian Proton rockets to three to four per year from seven to eight missions previously planned. The layoffs will leave the Reston, Virginia-based company with a 35- to 40-person payroll.

ILS has been suffering from three unrelated issues that have put pressure on its business.

The first is the spate of failures aboard the venerable Proton vehicle, all seemingly caused by disparate workforce-quality issues. These failures have occurred on Russian government missions but have nonetheless affected ILS, in large part by grounding the Proton.

The second is the rising tension between Russia and the West about Russia’s involvement in Ukraine. While this issue and the related Western sanctions against Russia have not yet forced ILS customers to cancel their launch plans, it has made it more difficult for ILS to regain traction in the market as it rebounds from the launch anomalies.

The third issue is what is likely a temporary market phenomenon. So far in 2014, the commercial satellites ordered have been mainly at the lighter end of the market for geostationary-orbiting telecommunications spacecraft. This follows a couple of years in which heavier satellites dominated.

Commercial Proton rockets are typically used to launch heavier satellites one at a time. The market’s move to lighter spacecraft has benefited Space Exploration Technologies Corp. of Hawthorne, California, whose Falcon 9 rocket has accumulated commercial orders; and also benefited Arianespace, whose Ariane 5 heavy-lift vehicle’s lower position is reserved for smaller satellites.

Ariane 5’s upper berth, for heavier satellites, has been Proton’s direct competitor in the commercial market.

“Staffing at ILS is now at a level that is consistent with our near-term business,” ILS President Phil Slack said of the layoffs in a statement. “Our customers will continue to be well-supported. Previous staffing was consistent with planning for 7-8 launches per year. We are now targeting 3-4 missions annually. If it is determined that we need to ramp up our existing staff to accommodate additional missions in the future, we will be able to accomplish this in a relatively rapid manner.”

In an interview Aug. 6, Slack said ILS expects to assemble a review board in September to assess the results of a Russian investigation into the May Proton failure. The review, Slack said, will likely permit Proton to return to commercial flights this fall.

Slack said that under current planning, which could change, the Proton rocket is scheduled to return to flight starting in late September or early October with back-to-back launches for the Russian government.

Once these two launches are completed, there likely will be room for two more Proton missions in 2014. He said ILS is likely to be assigned at least one of these, in which case it would launch the Astra 2G television satellite, owned by SES of Luxembourg.

Slack said it was too soon to determine ILS’s schedule after the SES launch until Proton’s overall manifest was made more clear by Russian government authorities.

The Russian government-ordered investigation into the May failure, which destroyed a Russian government telecommunications satellite, was concluded in July. Proton prime contractor Khrunichev Space Center of Moscow has been digesting the recommendations and remedial measures and will present a summary to ILS in September.

ILS, as it has in the past, will then convene its own review, including selected customers, insurance underwriters and outside experts.