Nearly 10 months after one of Sea Launch Co.’s rockets exploded in a fireball over the Pacific Ocean,destroying a commercial satellite and damaging launch equipment,the Long Beach-based company is at a critical juncture.
Last week, the company indefinitely delayed its anticipated follow-up launch of a rocket and communication satellite. Sea Launch blamed the delay on weather, not technical factors.
The company’s next launch is critical, according to observers.
“The first launch after a failure is very important,” said Marco Caceres, an aerospace analyst with the Teal Group Corp. of Fairfax, Va. “There is a lot riding on it because you don’t want two consecutive failures. If you have two in a row, people start worrying.”
The failure last January tarnished an otherwise strong launch record. Since Sea Launch’s first mission in 1999, the company has made more than 20 successful launches for customers, including El Segundo-based DirecTV Group Inc. and XM Satellite Radio Inc.
Sea Launch did suffer one previous failure in 2000.
Growing Competition
Sea Launch, a venture of Boeing Co. and Russian, Ukrainian and Norwegian companies, is just one of a handful of commercial satellite launch companies in the world.
But the stakes have risen considerably in the past few years. A growing number of launch companies,including startups in India and China,are seeking to pick off some of the limited number of launches.
There were only 22 commercial launches worldwide during the past 12 months generating some $1.4 billion in revenue, according to Federal Aviation Administration.
With the rise in cellular and other communications worldwide, it is expected the number of commercial satellites going into orbit in the next five years will roughly double.
In order to remain a viable player in the growing industry, Sea Launch must convince its customers that the incident was nothing more than an anomaly.
“It certainly was a setback,” said Paula Korn, a spokeswoman for Sea Launch. “We have spent the last eight months in recovery mode.”
Sea Launch’s Operations
Sea Launch is an outgrowth of Boeing’s own bid earlier this decade to go after commercial satellite launches.
The company scrapped it as an internal effort in 2004, after the technology slowdown that took hold in 2001.
The company does government satellite launches in a venture with Lockheed Martin Corp.
Bill Collopy, Sea Launch’s chairman, used to oversee Boeing’s Orange County operations.
The company launches from a converted oil rig along the equator 3,000 miles from its Long Beach headquarters. Launching from the equator provides a more direct route to a stationary orbit and allows a rocket to carry a greater payload, according to the company.
Rivals launch from land, including Arianespace, a French company that dominates the commercial satellite launch industry with more than 50% of the market. It has a launch site near the equator.
Sea Launch, which has about 50 full-time employees, operates out of a 17-acre former Navy base. There, workers receive the satellites, where they are moved, along with the rocket, onto a specially designed, 660-foot-long ship for final assembly.
While still docked in Long Beach, the rocket is then transferred to the launch platform, a self-propelled former oil rig that is 436 feet long. The ship, platform and crew must travel more than a week to the launch site.
Fiery Blast
On Jan. 30, a Zenit rocket carrying a telecommunication satellite and about 500 tons of fuel exploded just seconds into the mission in a fiery blast that damaged the platform, which is unmanned during liftoff.
While no crew members were injured, the explosion garnered attention across the globe when dramatic video of the incident made the rounds on the Internet. YouTube videos featuring the explosion have logged nearly a million views.
After a lengthy review, the company found that the cause of the explosion was a problem with one engine’s turbopump, which then set off a chain reaction. Sea Launch spent much of the past 10 months repairing its equipment and getting ready for last week’s postponed launch.
Sea Launch said the equipment was ready to go for the scheduled launch, but the weather was not cooperating.
Total damages were about $30 million, which were covered by insurance.
But Sea Launch also suffered financially from losing scheduled launches to competitors. (The company charges $80 million for a typical launch. Sea Launch doesn’t disclose its profit from the launches.)
The company had six launches scheduled in 2007 prior to the incident, but several customers have found other launch providers for this year’s missions.
In March, for example, broadband Internet provider Hughes Network Systems LLC switched the launch of its Spaceway-3 satellite to a competing company.
Danger of Failing
Although operations have been grounded for the majority of the year, Sea Launch said it has not permanently lost any customers. And some experts believe there will be few lasting effects from the explosion as long as it is not soon followed by another.
“The industry does understand that this happens; it’s just part of the game,” said Max Engel, a telecommunication analyst with Frost & Sullivan Inc. of San Antonio, Texas. “What will destroy you is not having a failure, but having the perception that your vehicle is systemically flawed. The danger of failing twice in a row is that it will feed the idea that they can’t get it right.”
Engel believes with all the attention this launch will receive, the mission should go off well. Caceres of Teal Group agreed it is unlikely there would be a successive failure,but that the stakes are higher than ever for Sea Launch.
“This is a pretty tight market and when you lose a customer to another company, it can be hard to get them back,” Caceres said. “But the company has a very good reputation and its launch success rate is very good.”
The company downplays the significance of its next launch. It has noted that a modified version of the rocket ,using the same type of engine that had failed,was launched successfully by the company’s Russian partner in June.
Besides Boeing, Sea Launch includes Aker ASA of Norway, RSC-Energia of Russia and Ukraine’s SDO Yuzhnoye/PO Yuzhmash.
Clough is a staff writer with the Los Angeles Business Journal.
