Glitch on Newest Globalstar Satellites Could Delay Upcoming Launches
The company said it will not proceed with the planned December launch of a third batch of six satellites, nor the early-2012 launch of a fourth and final group, until it has received assurances from its satellite prime contractor,, and momentum-wheel manufacturer Goodrich Aerospace that the problem will not recur.
In a Nov. 9 filing with the U.S. Securities and Exchange Commission (SEC), Globalstar also said the eight first-generation Globalstar satellites launched in 2007 have begun to show the same radiation-caused problems that has all but shut down the ability of the 48 first-generation satellites to provide two-way voice service.
Covington, La.-based Globalstar said it currently estimates that these eight satellites, which the company was counting on to provide full voice and data services with the 24 second-generation models, will be incapable of providing voice service beyond late 2013.
The performance decline of these satellites has made it all the more urgent for Globalstar to contract with Cannes, France-based Thales Alenia Space for six additional satellites. But while Globalstar has tried to force its prime contractor to begin work on more spacecraft, Thales Alenia Space has said Globalstar had let expire a contract option allowing it to order more satellites at prices fixed in that contract.
Globalstar and Thales Alenia Space have submitted their dispute to the American Arbitration Association, which has scheduled a Jan. 24 hearing.
Globalstar and its creditors in September amended a debt facility to permit Globalstar to order more satellites, but only if the average purchase price “does not exceed 55.2 million euros,” or about $77 million at current exchange rates.
In a Nov. 8 conference call with investors, Globalstar Chief Executive Jay Monroe described the contract issue this way:
“Our view is that we have a right to order additional satellites under our contract at known pricing. Thales’ view is that the date for that had gone by, and therefore that [we] could order new satellites but the pricing is subject to an ‘equitable adjustment,’” Monroe said.
“The ‘equitable adjustment’ to us means price increases of one percent per quarter — double or triple the actual rate of inflation. We consider that to be reasonable. Thales has a very different view, which does not appear to us to be ‘equitable adjustment’ at all.”
Anthony J. Navarra, Globalstar’s president of operations, said during the call that Thales and Goodrich notified Globalstar that momentum wheels on two of the satellites launched in July had developed anomalies, which he said showed up in the form of increased friction.
Navarra said the cause remains unknown, and that it may be something different from the momentum-wheel issue that has affected the first six second-generation satellites, launched in October 2010. That issue already forced Globalstar to delay the launch of the second group of satellites to give Goodrich and Thales Alenia Space time to resolve the problem.
“Frankly, what we’ve been told now is that there may be an additional or a different failure that we have to watch very carefully, and that’s what we’re going to do,” Navarra said.
Navarra said that it is too soon to determine whether Globalstar proceeds with the planned December launch or delays it, but that a decision would have to be made by late November.
The company’s financial health depends on returning its service to full two-way voice availability with the second-generation constellation.
In its SEC filing, Globalstar said it is working with its contractors to design a way for the satellites to fly with only two operational momentum wheels, rather than the three needed per satellite now.
Each Globalstar satellite carries four momentum wheels, one being a spare. Momentum wheels help maintain a satellite stably in orbit.