MDA’s Space Systems Loral Wins Its 5th and 6th Satellite Orders of 2013

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PARIS — Canada’s MDA Corp. on July 31 said its Space Systems Loral (SSL) satellite manufacturing division has won a fifth telecommunications satellite order this year, and preliminary work on a sixth, but that neither customer could be named.

The contracts, which are in addition to announced orders from Hughes Network Systems, Sky Perfect JSat of Japan, Intelsat of Luxembourg and Washington, and Eutelsat of Paris, put SSL back on track for what MDA Chief Executive Daniel E. Friedmann said is the company’s goal of maintaining a 30 percent share of the global commercial telecommunications satellite market.

Friedmann said he counts annual commercial contract wins based on the expected per-year delivery schedule of the satellites in question. For example, a four-satellite contract Intelsat awarded to Boeing Space and Intelligence Systems earlier this year is counted as one satellite per year by MDA’s calculation of market share.

MDA’s work on the sixth satellite is in the form of an authorization to proceed, which gives the customer the right to stop work at any time. Most of these are eventually transformed into full contracts.

SSL is expanding its Palo Alto, Calif., production plant by adding a second thermal-vacuum chamber to enable SSL to avoid paying for the use of other companies’ facilities. The work is scheduled for completion by late 2014.

In a conference call with investors, Friedmann said SSL needs to win seven satellites per year, depending on the size and complexity of each spacecraft, to keep its factory throughput at the expected levels of profitability.

For the three months ending June 30, SSL revenue totaled some 260 million Canadian dollars ($247 million), with an operating profit margin of 12-13 percent. Both figures are within the range of what MDA expected, MDA Chief Financial Officer Anil Wirasekara said during the call.

MDA purchased SSL in November 2012 in a transaction valued at $1.1 billion.

Richmond, British Columbia-based MDA, which is Canada’s biggest space-hardware manufacturer in addition to owning Palo Alto-based SSL, also said contract negotiations concerning Canada’s three-satellite Radarsat Constellation Mission (RCM) that had all but stopped work on the program have now been resolved.

In a conference call with investors, MDA officials did not detail what contract issues had slowed to a trickle the expected RCM work. In a statement accompanying its financial earnings release, MDA said it had “resolved the way forward on an important component of the RCM satellites. Work on RCM over the past several months has been limited awaiting resolution of this issue.”

In addition to owning SSL, MDA bids separately from SSL on contracts to provide communications satellite antennas through the company’s Montreal office. Friedmann said this work has posted several successes in recent months, suggesting that prospective customers who select prime contractors other than SSL trust that the security walls between SSL and MDA’s antenna division prevent proprietary information flow.

Friedmann said the level of bidding activity on telecommunications satellites has been high in the past couple of months, and that three contracts for satellites that have not been announced have been awarded to companies other than SSL.

One of those contracts is probably Canada-based Telesat’s Telstar 12 replacement spacecraft, which was awarded to Astrium Satellites of Europe. Telesat, which until late 2012 had the same majority shareholder as SSL, had been a devoted buyer of SSL satellites in recent years.

MDA has been booking about $48 million in annual revenue from a contract for unmanned aerial vehicle surveillance services in Afghanistan for the Australian government. The Canadian government had a similar contract but let it expire. The Australian business will end late this year.

SSL, with MDA providing close support, is one of three finalists for a Brazilian government telecommunications satellite contract whose importance for the winner may go well beyond the single satellite.

Brazilian authorities have said that depending on the technology transfer work offered by the winning bidder, the same company could be given work on future Brazilian Earth observation satellites.

Mitsubishi Electric Co. of Japan and Thales Alenia Space of France and Italy are the two other finalists in the Brazilian communications satellite competition, which industry officials have said could turn on which government offers the most offsets or technology transfer for Brazilian industry.

A contract award had been scheduled for July but has been postponed to September, industry officials said.

Friedmann said MDA has made Brazil a high priority with an enlarged commercial presence and will be bidding on an ocean-observation satellite program Brazil is likely to put out for bids this fall. 

 

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