ILS’s President Touts $2 Billion Firm Backlog

by

PARIS — International Launch Services (ILS) expects to hit its target of seven commercial missions in 2009 and has a firm backlog of more than $2 billion for 25 launches including Telesat Canada’s Nimiq 5 spacecraft, scheduled for launch this month, ILS President Frank McKenna said.

The Reston, Va., company, which markets Russia’s Proton rocket and focuses on the heavier end of the telecommunications satellite market, expects to perform seven or eight launches in 2010 and the same number in 2011.

McKenna said past supply chain issues that disrupted deliveries of the Proton’s Breeze-M upper-stage motor have been resolved. Ten Breeze-M units were manufactured in 2008, and 12 in 2009, he said.

The Russian government, which up to now has used the Block-DM upper stage produced by RSC Energia of Russia for government satellites, is gradually phasing out its use of Block-DM and eventually will use Breeze-M on all Proton missions.

In a Sept. 7 briefing with reporters, McKenna said ILS’s backlog does not include satellites whose development has stalled for lack of financing or other reasons. ILS, which is majority-owned by Proton manufacturer Khrunichev State Research and Production Space Center of Moscow, is profitable and prepared to confront what McKenna said is the coming downturn in the commercial satellite market likely to occur starting in 2010 or 2011.

Given that one or more new launch vehicles may enter the market by then, McKenna said the market is in for rough weather as more rockets compete for fewer satellite orders. He said ILS will be able to resist the temptation to drop prices, in part because of a forecasted stable demand for four or five Proton vehicles per year for Russian government missions.

McKenna said he is skeptical that Sea Launch Co. of Long Beach, Calif., can emerge from Chapter 11 bankruptcy proceedings and return to regular operations because of the financial stresses on the company. These stresses are particularly acute because Sea Launch, which operates in international waters on a floating platform, is not classified as a U.S. vehicle and cannot launch U.S. government satellites.

“I can’t get the numbers to work to produce a situation in which they survive,” McKenna said of Sea Launch’s plans to reorganize under new ownership. “But if they do, I know how to compete against Sea Launch.”

McKenna acknowledged that insurance rates for commercial Proton launches are slightly higher than for launches of Europe’s Ariane 5 rocket, even though Ariane 5 vehicles commonly carry two insured telecommunications satellites at a time and present insurers with the challenge of assembling larger packages of coverage — $500 million or more — for a given launch.

“If you viewed recent insurance rates for satellites we launch I think you will find that the difference between Ariane and us is narrowing and we expect it will disappear as we extend our success rate,” McKenna said.