OHB Hits Snags on Telecom Satellites

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PARIS— A new-generation telecommunications satellite developed by the European Space Agency in partnership with commercial fleet operator Hispasat of Spain has again fallen behind schedule and may not be launched this year as planned, industry officials said.

The satellite, Hispasat-AG1, is under construction by OHB SE of Bremen, Germany. It will be OHB’s first geostationary-orbit satellite and is intended to catapult OHB and Germany into a prime contractor’s role for telecommunications satellites.

The new platform’s principal quality is the Redsat flexible communications system that gives owners greater leeway in how they allocate a satellite’s resources after launch.

Originally scheduled for launch in 2013, the satellite has been delayed on multiple occasions. The most recent delay, confirmed by OHB during an Aug. 13 conference call with investors, may account for the apparent lease by Hispasat of the aging Nimiq 2 spacecraft owned by Telesat Canada.

Satellite tracking services recorded the migration of Nimiq 2 toward 36 degrees west, a Hispasat slot, where it arrived in May. Hispasat-AG1 is also scheduled to operate there. Hispasat did not respond to requests for comment.

OHB in February announced that Hispasat-AG1 had completed production and had been sent for extensive testing at Ottobrunn, Germany-based IABG.

In the Aug. 13 conference call, OHB Finance Director Kurt Melching said the latest delay would be on the order of “a few months” and will result in the program generating “insufficient economic results, which is unexpected but at the end of the day will not jeopardize our guidance” for full-year 2015 profit for the company.

OHB Chief Executive Marco R. Fuchs said the test program “is taking longer than expected. That’s why you see the slow development in our Space Systems division.”

OHB operates two divisions. Space Systems manufactures satellites; the Aerospace and Industrial Product s division builds components for Europe’s Ariane 5 heavy-lift rocket.

Fuchs said it is not only the Hispasat-AG1, but OHB’s overall telecommunications satellite development program that has produced disappointing results.

OHB is also developing a dual-payload satellite as part of an Airbus Defence and Space contract with the European Space Agency and the European Union’s executive commission to provide data relay from geostationary orbit for low-orbiting Earth observation satellites. That satellite, called EDRS-C, is also far behind its initial schedule.

EDRS-C uses the same SmallGeo platform as Hispasat-AG1. A third Small-Geo platform is likely to be used for Germany’s Heinrich Hertz technology demonstration satellite, to carry a military and civil government payload.

The German Aerospace Center, DLR, is expected to issue bid requests for Heinrich Hertz before the end of this year.

In contrast to its satellite division, OHB’s Aerospace and Industrial Products businesses are performing well, giving the company confidence that its revenue and profit forecasts for 2015 will be met despite the telecommunications satellite issues.

OHB owns 70 percent of MT Aerospace of Augsburg, Germany, which builds Ariane 5 rocket structures and is in line to perform similar work for the Ariane 6 rocket, whose inaugural flight is scheduled for 2020.

Fuchs said MT Aerospace has agreed to contribute its own funding to the vehicle’s development in return for capturing a larger share of the recurring revenue when Ariane 6 hits its expected production stride of 10-12 per year.

The Ariane 6 fuel tanks are expected to generate a one-year contract valued at around 45 million euros ($49.5 million) in the coming months, Fuchs said. Longer-term work on a second production line for the Ariane 6 strap-on booster casings likely will result in around 65 million euros in contracts over two years, he said.

OHB also is prime contractor for the 22 fully operational Galileo positioning, navigation and timing satellites ordered so far by European governments. The fifth and six of these satellites are scheduled for launch Sept. 10 aboard a Europeanized Russian Soyuz rocket. Models seven and eight are set for launch late this year, also aboard a Europeanized Soyuz.

Melching said OHB remains optimistic about meeting its revenue and profit targets for the year despite the telecommunications satellite issues in part because the company successfully passed a milestone in the development of Germany’s second-generation radar reconnaissance satellite system, called SARah. Completing the milestone will result in a payment in September, Melching said.