Loral Space and Communications reported flat revenues at its Skynet satellite-services division and sharply higher sales at its Space Systems/Loral satellite manufacturing arm for the first three months of 2006.

In a May 9 submission to the U.S. Securities and Exchange Commission (SEC), New York-based Loral also said its growing satellite manufacturing backlog — it was $830 million as of March 31, before the company won the AsiaSat 5 satellite contract, compared to $815 million on Dec. 31 — may require it to expand its factory capacity. That could oblige Loral to seek outside financing, Loral said.

Space Systems/Loral, based in Palo Alto, Calif., reported revenues of $139 million for the three months ending March 31, up from $100 million in the same period a year earlier.

The Loral Skynet division reported sales of $36 million in satellite-lease revenues for the first quarter of 2006, unchanged from the same period in 2005. Backlog, at $433 million, was down 5 percent from Dec. 31.

Skynet re-entered the North American satellite transponder-lease market in March, when its non-compete agreement with Intelsat of Washington ended. Intelsat purchased Loral’s Atlantic fleet, a key transaction in permitting Loral to exit Chapter 11 bankruptcy protection in late 2005.

Loral said sales from customers in North America aboard the Telstar-12 and Telstar-14 satellites were picking up. The company has rights to C- and Ku-band capacity aboard the Satmex 6 satellite scheduled for launch late this month, and Skynet earlier this year ordered the Tel star 11N satellite from Space Systems/Loral — also intended for the North American market — with a launch scheduled in 2008. Skynet’s satellites were 74 percent full as of March 31, compared to 65 percent a year earlier.

Loral is majority shareholder in XTAR LLC, and with its Spanish partners is marketing capacity on two X-band satellites now in orbit and intended for use by NATO and other allied government and military customers. But XTAR sales have not materialized as planned, and Loral said in its SEC filing that XTAR may need fresh capital in the coming months.

In addition to marketing the XTAR-Eur satellite capacity, XTAR is under contract to lease eight transponders aboard the Spainsat satellite launched in March. Loral’s lease obligations are scheduled to increase from $6.2 million to $23 million per year.

Taking the satellite manufacturing and services businesses together, Loral Space and Communications reported revenues of $172 million for the quarter, compared to $132 million a year ago. The net loss was $16 million, compared to a loss of $26 million a year ago.

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