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Space Systems/Loral confirms sell-off plan

November 5, 2018

By Chris Forrester

Satellite builder Space Systems/Loral (SS/L), owned by Maxar Technologies and its CEO Howard Lance, has confirmed that he has “a number of prospective buyers” in discussion to acquire SS/L’s Palo Alto, California production facility.

Lance was speaking during Maxar’s quarterly earnings statement where he reported that overall combined earnings for Maxar’s Space Division were down 12 per cent for the three months that closed on September 30th, a $263 million (€231m) revenue fall has been experienced.

Maxar’s y-o-y revenues declined 10 per cent to $886 million when compared to the firm’s financials for the first nine months of 2017 — the GEO satellite business – now up for sale – is seen as a significant financial encumbrance, resulting in negative profit margins for the parent company’s overall revenue picture, according to Lance.

SS/L financial slump — the company is down 31 per cent in revenues y-o-y — is that components for the firm’s GEO satellites have been found to be highly problematic, with defective parts from an unnamed supplier having to be replaced and reintroduced into production cycles, thereby increasing costs and pulling profits down. Satellite completion times have increased and, as revenues have fallen, so has the workforce at SSL, with the necessary layoffs additionally impacting overall company productivity and delaying manufacturing activities.

SS/L’s prospects are also not helped by a shortage of industry orders, not just for SS/L but the industry in general. The Spacecom cancellation of its Amos-8 satellite contract with SS/L was an additional concern for Maxar, leaving SSL with but a single order for the remainder of 2018, that being for Japanese operator BSAT.

Lance confirmed that Maxar’s core business was solid, if GEO satellites were removed from the portfolio. Maxar has carved out a useful niche for itself in the small-sat market. NASA showing great interest in small-sat development, the agency selected Maxar as one of three firms to engage in such work, receiving a contract that is estimated to be worth $750 million. Another opportunity for Maxar rests with the $3 billion estimated value of a Telesat constellation contract and has teamed with Thales Alenia Space as the companies compete against Airbus to develop a complete plan for such a project. A decision on the final contract is expected to be announced in 2019. The Telesat constellation will comprise 300 satellites when fully executed, with the initial contract either for the entire constellation or a few initial smallsats.

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