Loral Space and Communications said its satellite manufacturing division, Space Systems/Loral, which is planning a stock introduction for up to 19.9 percent of its equity, has increased its profitability in 2010 as a result of higher throughput in its factory and reduced operating costs.

Michael B. Targoff, chief executive of New York-based Loral, said the company believes its satellite-building division can maintain a gross profit margin of between 8.5 percent and 9.5 percent over the long term, on condition that it continues to win at least five satellite orders annually.

Palo Alto, Calif.-based Space Systems/Loral did even better than that for the three months ending June 30, posting an EBITDA — earnings before interest, taxes, depreciation and amortization — margin of 13 percent.

In an Aug. 12 conference call with investors, Targoff said satellite manufacturing cannot sustain this level of profitability, but that the 9 percent average was within its reach.

Space Systems/Loral is the only major satellite prime contractor to depend almost exclusively on the commercial market. That market has been at historically high activity levels in the past three years, and industry officials say 2010 and 2011 also look good.

Whether this level of activity can be maintained beyond 2011 as some of the biggest satellite fleet operators complete major spending programs is a subject of debate in the industry, as is whether Loral’s initial stock offering for Space Systems/Loral will attract investors.

Targoff said Loral elected to float 19.9 percent of Space Systems/Loral because maintain at least 80 percent ownership allows the parent company to consolidate the division in its accounting. This accounting rule, Targoff said, “plus prudence” led Loral to elect to sell 19.9 percent.

Targoff was circumspect in talking about satellite fleet operator Telesat of Canada, in which Loral has a 64 percent financial stake but a 33.3 percent voting interest.

New Canadian regulations would appear to permit a non-Canadian company such as Loral to acquire Telesat. But Targoff said “there’s an advantage to having a Canadian partner in Canada. We’ve never discussed [with Telesat’s other owner, Canada’s PSP Investments] selling to them or buying them out.”