MDA May Scrap In-orbit Satellite Servicing Plan

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PARIS — Canada’s MDA Corp. is ready to scrap its attempt to create a commercial business  servicing in-orbit satellites if an inaugural customer does not materialize within the next couple of months, MDA Chief Executive Daniel E. Friedmann said July 29.

In a conference call with investors, Friedmann said Richmond, B.C.-based MDA appears to have cleared most technical hurdles confronting the service, which would be a first for the space industry. But substantial financial and liability-related questions remain, he said.

“It’s really boiling down to figuring out what exactly is the modus operandi of when the refuelings are going to happen in the lifetime of the satellite, and the issues if something goes wrong, and what is the price,” Friedmann said. “It’s not easy. It has never been done before, and people have to think of new business models.”

The recent rise in the cost of launching satellites has not helped the in-orbit servicing model, he said, as it raises the missions’ overall costs. Satellite insurance underwriters have long said satellite refueling would confront a broad array of issues including who would pay in the event a satellite was damaged by the refueling vehicle.

Satellite operators have said they are unsure whether it is worthwhile to spend money to refuel an orbital asset depreciated over 15 years, especially since some satellite components unrelated to the fuel supply are more likely to fail after so much time in orbit.

Government agencies, including NASA, have indicated long-term interest in satellite servicing as part of space exploration programs that require in-orbit assembly or transfer of hardware, and for removal of large pieces of space debris.

“We’re just working our way through the issues,” Friedmann said. “I’m hopeful that over the next couple of months we can conclude this thing one way or another and move on.”

MDA’s Information Systems division, which accounts for more than half the company’s revenue and includes most of its space-related business, reported a 25 percent increase in revenue and a 32 percent increase in gross profit for the six months ending June 30 compared with the same period a year ago.

Revenue was 273.9 million Canadian dollars ($261.2 million). EBITDA, or earnings before interest, taxes, depreciation and amortization, was 65 million Canadian dollars. Backlog at June 30 stood at 778 million Canadian dollars, down from where it stood on Dec. 31.

Major revenue-generating events in 2010 include work on payload electronics for two Russian commercial telecommunications satellites, the Express AM5 and AM6 spacecraft, whose total contract volume is estimated at more than 260 million Canadian dollars.

MDA’s more recent $254 million contract to provide a telecommunications satellite to the National Space Agency of Ukraine is not included in the company’s revenue or backlog figures

Also contributing to revenue was MDA’s unmanned aerial vehicle (UAV) service in Afghanistan for the Canadian and Australian governments, both of which extended their contracts to June 2011.