Loral Purchase Fuels MDA’s Hopes in Satellite Servicing

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PARIS — MDA Corp.’s purchase of satellite builder Space Systems/Loral (SS/L) could revive MDA’s dormant effort to build a vehicle to refuel satellites in orbit, MDA Chief Executive Daniel Friedmann said June 27.

In a conference call with investors, Friedmann said the purchase satisfies a longstanding MDA goal of creating a base of operations in the United States in order to get more U.S. government business for MDA’s established robotics, surveillance and intelligence divisions.

While Palo Alto, Calif.-based SS/L does little business with the U.S. government, one of the growth areas MDA sees in the purchase lies in adding a robotics and surveillance business to the SS/L portfolio with the U.S. government as the end customer.

“MDA capabilities in the robotics, surveillance and intelligence areas have a large demand in the United States — demand that we have just not been able to access,” Friedmann said. “Traditionally we have won the design phases [for U.S. government work] but not the contract because the work is not done in the U.S. … When the big programs go forward, we get sent home.”

The latest example of what MDA fears will be a thanks-but-no-thanks decision by the U.S. government has been MDA’s plans to build a robotic vehicle that could make in-orbit visits to satellites that have experienced minor component failures, or that are healthy but need refueling.

Richmond, British Columbia-based MDA and Intelsat of Luxembourg and Washington had a $280 million agreement that would have made Intelsat — the world’s largest commercial satellite fleet operator — the inaugural customer for the MDA satellite-servicing business.

But the two companies ended their agreement when it became clear that no U.S. government backing, considered necessary to close the business case, was imminent.

MDA has made proposals under the U.S. Defense Advanced Research Projects Agency (DARPA) Phoenix satellite-servicing research program. Friedmann said the agency’s initial reaction to the MDA bid has been good.

DARPA recently sent out a request to satellite fleet owners for a satellite nearing retirement that might be used as a target for a Phoenix demonstration that would launch in 2015 or 2016. The agency set a July 19 deadline for responses.

MDA’s proposed SS/L purchase will take several months to clear regulatory approvals but could be finalized by September, MDA Chief Financial Officer Anil Wirasekawa said during the conference call.

Friedmann said NASA likely will issue a request for bids this year for a similar service, but in the past MDA has conceded that NASA would not fund a project whose principal work is performed outside the United States. The SS/L purchase, he said, makes an MDA bid immediately more credible.

“In our due diligence [in reviewing SS/L’s status and potential] we tested the ability to diversify into new applications for a wide variety of space missions,” Friedmann said.

Friedmann said MDA does not plan any layoffs in its satellite communications payloads division, which has at least some overlaps with SS/L’s work force, nor are any layoffs expected among SS/L’s 3,200 employees. He also said the SS/L management team would be asked to stay but that they have not signed commitments to do so.

 

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