Pressure Builds on Satmex After Satellite Setback

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PARIS — Satellite fleet operator Satmex of Mexico, already under pressure to sell itself or raise cash to purchase a badly needed new satellite, faces additional stresses following the failure of the xenon-electric propulsion system on the Satmex 5 satellite.

Satmex said the failure came without warning Jan. 27. Following the failure of a backup system several years ago, the satellite now will rely on its conventional propellant to maintain itself stably in orbit. Satmex said it estimates that Satmex 5 has enough fuel to continue to operate for 2.7 years.

In a Jan. 29 filing with the U.S. Securities and Exchange Commission (SEC), Satmex said it does not expect to recover the use of the xenon-ion propulsion system (XIPS), one of many early generation units placed on Boeing 601 model satellites that proved defective.

Stationed at 116.8 degrees west, Satmex 5 was launched in 1999. Satmex officials had hoped to maintain the satellite’s full functionality until 2014.

Satmex carried a $90 million insurance policy on Satmex 5, but the policy excluded XIPS-related failures in its coverage because of the failures of XIPS on other Boeing 601 satellites launched in the late 1990s.

Satmex had been slated for auction in 2005, but none of the bidders offered the minimum demanded by the Mexican government. The company subsequently went through bankruptcy proceedings in Mexico and the United States, emerging only after it agreed to seek its creditors’ approval before buying a new satellite.

In its SEC filing, Satmex said it is continuing “to review its strategic alternatives and restructuring options. … The company is working on plans to obtain financing for the construction and launch of a new or replacement satellite.”

The Satmex 6 satellite, launched in 2006, is reported healthy in orbit and is the company’s principal source of revenue. Satmex also operates the Solidaridad 2 satellite, which was launched in 1994 and since 2008 has been operating in inclined orbit, meaning that to save its remaining fuel it no longer maintains itself stably on its north-south axis.