PARIS — Satellite manufacturer Space Systems/Loral (SS/L) on Aug. 10 reported a 9 percent increase in revenue but a sharp drop in operating profit for the six months ending June 30 and said it could lose up to $8 million in orbital incentives if a review blames SS/L, and not Sea Launch, for the solar-array failure on the Intelsat 19 telecommunications satellite.

Palo Alto, Calif.-based SS/L, which is being sold to Canada’s MDA Corp. for $875 million, said Luxembourg- and Washington-based Intelsat owes it $18 million in orbital incentive payments that are paid out during a satellite’s service life.

The SS/L-built Intelsat 19 satellite was launched June 1 aboard a Sea Launch rocket and suffered damage to its south solar array. The cause of the damage is under investigation, with SS/L and Sea Launch each suggesting that it is the other’s hardware that is at fault.

In a filing with the U.S. Securities and Exchange Commission, SS/L parent company Loral Space and Communications of New York said that if the failure is pinned solely on the satellite, SS/L would lose $8 million of incentives. If Bern, Switzerland-based Sea Launch AG’s rocket is found to be the cause, SS/L should receive the full $18 million in orbital incentives assuming no other issues develop during the satellite’s service life, Loral said.

The figures do not include any costs incurred by SS/L during the failure inquiry.

For the six months ending June 30, SS/L reported revenue of $581 million, up 9.2 percent from the same period a year ago. But operating income, at $11.1 million, was down nearly 80 percent in the period. Loral said the drop in income is due to several factors:

  • A $12 million loss provision for a contract awarded earlier this year.
  • An $11 million decline in profit due to lower revenue because the current satellites SS/L is building are smaller than they were during the same period last year.
  • An $8 million expense due to delays in a satellite launch caused by a technical issue with the satellite.
  • Additional expenses of $10 million to prepare contract proposals.

SS/L’s backlog was $1.7 billion as of June 30, up 20 percent from where it was Dec. 31. The company has won three satellite orders in 2012.

The company said SS/L had $364.7 million in outstanding orbital incentive payments as of June 30.

Loral owns 56 percent of Xtar of Herndon, Va., which operates the Xtar-Eur X-band spacecraft at 29 degrees east longitude and leases 7.2 72-megahertz transponders on the Spainsat satellite owned by Hisdesat of Spain. Hisdesat owns the remaining 46 percent of Xtar.

Xtar, which has struggled to win military and other government business, reported $14.7 million in revenue for the six months ending June 30, down 15 percent from the same period a year ago. The company reported an operating loss of $6.7 million for the period, up from $4.6 million last year.

Peter B. de Selding was the Paris bureau chief for SpaceNews.