Khrunichev’s Commercial Launch Revenue Has Soared Since ILS Deal

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PARIS — Russia’s Khrunichev space hardware builder has tripled its revenue from commercial satellite launches since 2005 following its acquisition of a majority stake in International Launch Services (ILS) and the consolidation of Proton rocket production, Khrunichev and ILS said.

In a document dated Sept. 3 and presented here Sept. 6 during the World Satellite Business Week conference organized by Euroconsult, Khrunichev said revenue it books from commercial launches reached nearly $600 million in 2009 compared with $198 million in 2005.

During that period, Moscow-based Khrunichev State Research and Production Space Center became the principal shareholder of ILS, the Reston, Va.-based company that markets the Proton rocket commercially. Khrunichev said that in the two years since it took over ILS, it has booked more than $1 billion from the commercial launch venture.

Following a Russian government-ordered space sector restructuring, Khrunichev also has increased its control over Proton production to 65 percent of the vehicle from 30 percent previously.

A second phase of the reorganization will boost Khrunichev’s role to 70 percent, the company said.

Khrunichev is guiding Proton production to an annual throughput of 14 vehicles. Coupled with investment in the Baikonur Cosmodrome spaceport, Proton operations are providing launches at a rate of about one per month.

ILS President Frank McKenna said that the operating assumption in the coming years is that seven or eight commercial Proton missions will be conducted per year, plus four or five government launches.

In a press briefing, McKenna said the next phase of Proton upgrade, expected to be completed in early 2011, will bring the vehicle’s standard mission capacity to 6,300 kilograms to geostationary transfer orbit, the destination of most telecommunications satellites, compared with 6,150 kilograms now.

The Russian government injected 8 billion rubles ($230 million) in cash into Khrunichev in 2009 to enable the company to “weather the economic downturn from the global recession by allowing it to [invest] in production and launch site infrastructure,” Khrunichev said in the Sept. 3 document.

The company said it has invested 10.5 billion rubles of its own during the past four years “to ensure sustainable production growth.”

McKenna said ILS and Khrunichev have shelved, at least for now, plans to offer a Proton Duo launch option that would carry two relatively small telecommunications satellites, both built by Orbital Sciences of Dulles, Va., into geostationary transfer orbit.

To ensure that the dual-launch campaign does not run into problems in which one satellite owner is obliged to wait for another whose satellite is behind schedule, ILS was pitching the Proton Duo idea to a small number of large satellite-fleet operators in an attempt to sell the entire Proton Duo launch to a single customer. ILS believes it can launch Proton Duo missions at prices below those charged small satellites launched as co-passengers on Europe’s heavy-lift Ariane 5 rockets or as sole passengers on the European version of Russia’s Soyuz rocket.

For now, McKenna said, none of the operators approached has signed on for Proton Duo.

Seeking to enter the European government launch market via the commission of the 27-nation European Commission, ILS expects to make a proposal to launch 18 of Europe’s Galileo positioning and navigation satellites, McKenna said.

Financed by the European Commission, the Galileo project has run out of available cash and has been able to finance the launch of only 10 of the 14 operational satellites under construction. The four remaining satellites were presumed to be launched aboard an Ariane 5, but no contract has been signed.

McKenna said the European Commission, which indicated it was surprised at how expensive Ariane 5 and European Soyuz launches are, said it would accept an ILS proposal, without any guarantees. McKenna said ILS believes it could launch 18 Galileo satellites for a total of about 300 million euros ($390 million).