OHB Urges Germany To Drop MTG Opposition

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PARIS — German space-hardware manufacturer OHB Technology on May 19 urged the German government to end its opposition to a multibillion-dollar weather-satellite program for Europe, saying OHB’s role in the program carries at least as much value for Germany as the role of prime contractor.

Bremen-based OHB is not the designated prime contractor for the six-satellite Meteosat Third Generation (MTG) program. But as the principal subcontractor to Thales Alenia Space of France, OHB will be responsible for providing the MTG satellite platforms, the sounder instruments that will be the main payload on two of the spacecraft, and for integrating the sounder payload onto the satellite platforms.

“[O]ur role is a very good result for Germany,” OHB Chief Executive Marco R. Fuchs said during a conference call with investors. “We believe it is more valuable than a theoretical prime contractorship.”

That role is apparently not enough for some officials at the German Transport Ministry, who have protested the selection by the European Space Agency (ESA) of Thales Alenia Space and OHB over a competing MTG bid made by Astrium Satellites of Germany.

The German government opposition has slowed, but not stalled, MTG’s progress at ESA, which in March entered into final contract negotiations with the selected consortium with a view to signing a contract valued at around 1.25 billion euros ($1.5 billion) in June.


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But Europe’s Eumetsat weather satellite organization of Darmstadt, Germany, is paying the majority of the MTG project’s costs. German resistance has prevented Eumetsat — which requires unanimity among its member governments — from beginning the process of collecting financial commitments for MTG.

“There are uncertainties, and this project is still pending,” Fuchs said. “But I am pretty confident that in the next few weeks there will be a positive decision.”

Also uncertain, Fuchs said, is whether the European Union will be able to contract for additional Galileo navigation satellites anytime soon. OHB bested Astrium in a competition to build the first 14 Galileo operational spacecraft and in January was awarded a contract valued at 566 million euros.

In April, OHB signed a contract with its Galileo program partner, Surrey Satellite Technology Ltd. — which is now owned by Astrium — to provide the 14 payload electronics units for the Galileo spacecraft. That contract is valued at 230 million euros.

In documents published May 19 as part of its financial statement for the first three months of 2010, OHB said the first two of its 14 Galileo satellites will be launched in late 2012.

The European Union’s executive commission, which is financing Galileo, has insufficient funds to contract for the full 30-satellite constellation, and it remains unclear whether fresh financing will be available before the commission’s new seven-year budget cycle takes effect in 2014.

ESA is the commission’s technical contract manager for Galileo, but ESA has voluntarily frozen its spending for 2010 and 2011 and has made no plans to replace the commission as the Galileo paymaster.

“We are curious to see with ESA and the European Union how and when the [Galileo] procurement will continue,” Fuchs said.

Fuchs said the EnMap Earth observation satellite, which OHB subsidiary Kayser-Threde of Munich is building for the German Aerospace Center, DLR, has fallen further behind schedule because of difficulties in producing the main hyperspectral sensing instrument.

When the 90 million-euro contract was signed in 2008, EnMap was to be launched in 2012. That subsequently slipped to 2013, and Fuchs said continued development challenges will force a delay to 2014.

While the EnMap platform is subject to a firm, fixed-price contract with DLR, the hyperspectral imager is under a cost-plus contract regime, he said.

OHB’s first geostationary-orbiting telecommunications satellite, being built with ESA research funds in a project called Small Geo, is still scheduled to launch for Spain’s Hispasat commercial satellite operator in late 2012, Fuchs said.

OHB Technology reported that revenue for the first three months of 2010 increased by 47 percent, to 97.7 million euros, with much of the increase coming from the company’s August 2009 purchase of Carlo Gavazzi Space of Milan, Italy.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled 7.6 million euros, or 7.8 percent of revenue. Backlog at March 31 stood at 1.36 billion euros, up 74 percent in large part because of the Galileo contract award.

OHB said it was sticking with its earlier forecast that full-year revenue would be around 430 million euros, an increase of 34 percent over 2009, with an EBITDA margin of 7.8 percent.