Orbital Sciences Books First GeoStar-3 Orders, Nears Antares Engine Decision

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PARIS — Satellite and rocket manufacturer Orbital Sciences Corp. on July 17 said it had booked the first two orders for its higher-power telecommunications satellite product, the GeoStar-3, and that it had made a second bid to use its new Antares rocket for a commercial mission.

In a conference call with investors, Orbital Sciences Chief Executive David W. Thompson said a decision has just about been made on a long-term supplier for the Antares first-stage propulsion system, and that a formal announcement was imminent.

Antares is currently powered by the AJ-26 engine built by NK Engines of Russia and refurbished by Aerojet Rocketdyne of Sacramento, California. The current supply of these engines is running out and Dulles, Virgina-based Orbital is faced with making a fresh order to restart production, or choosing an alternative supplier.

Among other options, Orbital is weighing an engine to be built by ATK’s Aerospace and Defense Groups, with which Orbital is merging. The transaction is expected to close late this year.

Orbital has been designing a higher-power version of is established GeoStar-2 satellite platform in hopes of capturing a broader market as telecommunications satellites move to higher-power applications.

In the conference call, Thompson declined to name the two inaugural GeoStar-3 customers. He said the new product line provides a 50 percent increase in capacity from the GeoStar-2 and is priced at a 30 percent premium. The company is hoping for at least one, and perhaps two, additional commercial telecommunications satellite orders by the end of the year, he said.

Orbital’s Antares rocket has successfully conducted four launches, three of which carried cargo to the international space station for NASA.

The company had said in 2013 that it submitted a bid to launch a commercial payload on Antares. Thompson said this program has been delayed but that Orbital is still hopeful Antares will be selected. A bid for a second commercial launch was submitted more recently. Both competitions should be decided by the end of this year.

The Orbital-built Amazonas 4A satellite for fleet operator Hispasat of Spain suffered a power failure soon after its launch in April and its operational life will be reduced. Orbital reported a $6.4 million hit to operating income and said it would file an insurance claim to cover the loss of its satellite performance-incentive fee.

In its July 17 financial statement for the three months ending June 30, the company said it had received an insurance payment of $12 million, which will cover the loss of the incentive fee plus nearly $3 million in second-quarter charges as Orbital investigated the cause of the failure.

Madrid-based Hispasat had been in the market for an Amazonas 4B satellite, but it was unclear whether this contract was firm and was one of the two inaugural GeoStar-3 satellite orders.

Thompson said the higher power of the GeoStar-3 product line enables Orbital to compete to provide high-throughput satellite capacity, usually through the use of multiple spot beams, in both Ka- and Ku-bands. The satellites would employ a mix of standard chemical and electrical propulsion, which is becoming popular with satellite operators because of the reduced launch weight of satellites with at least partial electric-propulsion capability.

The success of all three Orbital Antares missions to the international space station using the company’s Cygnus carrier is likely to permit Orbital to release management reserves held to protect against a program issue and report improved profitability, Orbital Chief Financial Officer Garrett E. Pierce said during the conference call.

Like other commercial satellite manufacturers, Orbital has benefited from low-interest U.S. Export-Import Bank loans to Orbital customers to finance their satellite purchases.

But the bank now faces opposition in Congress, which must reauthorize is operations in September or force the bank to shut down.

Thompson said Orbital has made its case with Congress that the bank “is important to our industry and to the country” as U.S. exporters compete with nations whose export-credit agencies are active. He said he is cautiously optimistic that the bank will be reauthorized by Congress.

 

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