PanAmSat Contracts Become Intelsat’s Baggage

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  Space News Business

PanAmSat Contracts Become Intelsat‘s Baggage

By PETER B. de SELDING
Space News Staff Writer
posted: 07 November 2006
03:37 pm ET


PA RIS — Intelsat’s purchase of PanAmSat came with unexpected baggage in the form of launch contracts that PanAmSat signed and that are now causing headaches for Intelsat, according to industry officials.

In at least one case, Intelsat appears to be under contractual obligation to provide in-orbit replacement capacity to a competitor if it cannot launch the competitor’s satellite on time. With a launch delay now almost inevitable, Intelsat is scrambling to find a replacement launch option to avoid having to disrupt its own operations over Asia by providing capacity to the competitor, Measat Global of Malaysia, officials said.

Prior to being taken over by Intelsat, PanAmSat ordered multiple launches aboard the Land Launch system and then signed one of those over to Measat, in the process assuming certain liabilities.

Securing an alternative launch in a market overcrowded with commercial rockets used to be easy. But in the past year the market has tightened considerably as a large number of satellites are nearing completion and will need launch slots in the coming months.

This surge in demand has arrived at the same time as what U.S. and European launch officials describe as a sudden, brutal price inflation that has made itself felt up and down the supply chain of Russia’s once-inexpensive rocket manufacturing industry.

The difficulty Russian-based rocket makers are having in securing enough components to meet launch-service suppliers’ commitments is rippling through the global market, producing launch delays whose extent is still not clear.

Of the six rocket systems now active on the commercial market for geostationary telecommunications satellites, four are Russian or Russian-Ukrainian.

The new Russian-Ukrainian Land Launch system, expected to begin commercial service in mid-2007, is one of the most heavily affected by these component delays.

A problem for Land Launch is a problem for Intelsat.

Hoping to secure cut-rate launch prices for its own satellites, PanAmSat signed a multiple-launch agreement with Land Launch’s commercial operator, Sea Launch Co. of Long Beach, Calif., in July 2005.

Land Launch will operate a close variant of Sea Launch’s Zenit 3SL rocket from a refurbished launch pad at the Russian-run Baikonur Cosmodrome in Kazakhstan. The system is intended to loft satellites that are too small for Sea Launch’s equatorial operations in the Pacific Ocean.

As Land Launch’s inaugural customer, PanAmSat benefited from especially favorable contract terms, all the more so since PanAmSat did not insist on a demonstration flight of the vehicle it will use before placing its own satellite on board.

While a two-stage Zenit rocket is scheduled to launch a Russian government satellite in December, next year’s launch of the PanAmSat — now Intelsat — PAS-11 satellite will be the three-stage Land Launch system’s first mission to geostationary orbit.

In addition to PAS-11, the Intelsat Land Launch contracts resulting from the PanAmSat bulk order include the Horizons-2 satellite co-owned by Intelsat and JSAT Corp. of Tokyo. It too is scheduled for liftoff in 2007, but Sea Launch President Rob Peckham has conceded that the supply-chain disruptions, plus the usual issues involved in inaugurating a new launch system, have put that schedule into question.

The Amos-3 satellite owned by Spacecom of Israel, meanwhile, is scheduled for a late-2007 Land Launch mission under a contract signed not by Sea Launch but by Space International Services, a Russian-Ukrainian company.

Malaysia’s Measat satellite-fleet operator signed a contract with PanAmSat in March for the launch of Measat 1R satellite in September 2007. Measat subsequently told Malaysian stock-market regulators that the launch would be between November 2007 and January 2008.

The launch price, Measat said, was $44.225 million for the 2,400-kilogram Measat 1R.

Measat said in a stock-market submission in May that it purchased the launch from PanAmSat “to reduce the cost and ensure capacity availability in case of a launch delay.”

Dianne VanBeber, Intelsat vice president for investor relations, said the company would not discuss details of the contract.

According to industry officials, however, the deal requires Intelsat to use its best efforts to supply Measat with capacity in case the launch is delayed.

An industry official said it may be costly for Intelsat to furnish in-orbit capacity to Measat, especially after the September loss of the Intelsat IS-802 satellite following an in-orbit failure. That satellite provided Indian Ocean region coverage, which is part of the area to be covered by Measat 1R’s global beam.

Land Launch is also about to sign a contract for the launch of the Telstar-11N satellite owned by Loral Skynet, a unit of Loral Space and Communications of New York, industry officials said. The satellite will be ready in early 2008. Loral spokesman John McCarthy said a launcher selection has not been announced.