Airbus forecasts 15 to 18 commercial GEO orders as new annual norm

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PARIS — As satellite manufacturers grapple with what increasingly looks like a permanent decline in the number of commercial geostationary communications satellites purchased worldwide, one offered hope that a partial rebound will ensue in the coming years.

Nicolas Chamussy, Airbus Defence and Space’s executive vice president of space systems, said his company has assembled a “very accurate database” of orbiting satellites that will need to be replaced by 2025. Satellite operators doing the minimum of replacing ageing spacecraft combined with those pursuing new growth opportunities should place the annual average “in the range of 15 to 18 per year” over the next few years, Chamussy said Sept. 12 at the World Satellite Business Week conference here.

“It’s not the 20-25 number driven after that we have witnessed in the past years, but it’s still a sizeable number,” he said during a panel discussion.

Geostationary telecom satellites have an average design life of 15 years. Many surpass that by a few years, but eventually run out of fuel and are decommissioned. With satellite life extension ventures still in their infancy, it is unclear how significant an impact they will have on Airbus’ projections. Intelsat and SES, the world’s two largest satellite fleet operators, have ordered satellite-life-extension missions from Northrop Grumman Innovation Systems and Maxar Technologies, respectively.

Other panelists agreed that a return to historical norms was unrealistic, but none offered as rosy a picture as Airbus.

“We will probably stay in a range of between 10 and 15 GEO satellites that are on the accessible market,” said Jean-Loïc Galle, president and CEO of Thales Alenia Space.

Galle estimated the world’s satellite operators will order around 10 commercial GEO satellites this year. That would be up from the seven ordered in 2017.

“It will be a low number,” he said.

With less than four months remaining, 2018 has seen just six normal commercial GEO contracts awarded worldwide. Airbus and Maxar’s SSL have both won two apiece while Northrop Grumman Innovation Systems and Thales Alenia Space have each won one. China Great Wall Industry Corp. has framework agreements, but not firm contracts, for three GEO satellites.

Several manufacturers sought to convince prospective customers that they are committed to weathering the order drought that now threatens to close veteran manufacturer Space Systems Loral’s GEO business.

“GEO is here to stay,” said Chris Johnson, president of Boeing Satellite Systems International. “It’s beachfront property, certainly. Some of the other orbital regimes might be the lake or might be a different beach, but it’s still going to be a really important thing for the overall industry and Boeing is committed to see it through.”

Lisa Callahan, Lockheed Martin’s vice president and general manager of commercial civil space, said the company is insulated from the weak GEO market by its government business. What in the past was viewed as a weakness for Lockheed Martin — not having a significant share of the commercial satellite industry — is now viewed as a strength, and Callahan sought to present it as such.

“Years ago we saw some of this coming and the diversification that we needed to do to be able to ebb and flow in different markets.” she said.

Lockheed Martin has has an average of 18 “GEO-like satellites” moving through its factories every year, she said, with this year being above average at 21 such satellites. Investments in government satellites — NASA and the U.S. Defense Department are large customers — bring technologies that also find use in commercial satellites, she said.

“That is going to help in the commercial market as it returns, and I’m sure it will in the future,” she said.

Satellite manufacturers are all pursuing business building constellations of smaller but more numerous satellites in medium and low Earth orbits. Those satellites and the evolution of more expensive high-throughput GEO satellites have rewritten the script in determining the value of individual satellite orders, executives have said.  

SSL and its parent company Maxar Technologies have described smallsats as a growing business opportunity as it shrinks the size of its GEO business. Dario Zamarian, president of SSL, said the GEO market has “reached a new structural low.”

“It is not obvious whether our customers have yet together with us found a magic formula to sustain a resurgence of demand with supply,” he said.

Maxar is in the process of evaluating “strategic alternatives” for SSL’s GEO business, which include a possible exit. The company expects to make a decision by the end of the year.

“Should we partner up with a culturally compatible, financially and technologically compatible company? Should we explore a sales option? We haven’t made any of those decisions just yet, but we are not ashamed of recognizing that the market is not as it used to be,” Zamarian said.