SpaceX Explosion Costs One Highly-Insured Israeli Satellite, Stops Sale of Satellite-Maker To China

[Israeli satellite-maker Spacecom had $200 million invested in Amos-6 satellite, but insured the craft for $330 million.  Actual receipts will be slightly less, due to launch failure (Spacecom Assures Bondholders After Loss of Amos 6).  ]

The Story behind the Explosion of Amos-6

israeldefense

An unexpected explosion on the SpaceX launch pad at Cape Canaveral brought Israel’s flagship space project to an end

Photo: YouTube

Spacecom’s Amos-6, an estimated $200 million communications satellite built by state-owned Israel Aerospace Industries (IAI), was deemed a total loss after the Space-X Falcon 9 launcher to which it was attached exploded during a static engine test yesterday (Thursday). Defense News reports that Spacecom said the “anomaly” would have “substantial influence” on the company.

The explosion was a heavy blow for all parties involved: the Israel Aerospace Industries (IAI), who worked for years on the satellite’s development; Spacecom, the Israeli satellite operator that was expecting to sign a large deal with a Chinese company; and the American company SpaceX, which was entrusted with the satellite’s launch.

An investigation has already been launched into the circumstances that led to the failure, which has far-reaching implication both economically and in terms of the image and prestige of the Israeli companies involved, reports the Jerusalem Online. Amos-6 is the largest communications satellite manufactured in Israel and was meant to provide television services to Europe as well as other communication services. Amos-6’s flagship project was the deal with Facebook according to which the social networking giant was planned to provide high-speed internet services to at least 14 countries across Africa using the Israeli satellite.

The satellite was expected to operate for at least 16 years, and now Israel will have to decide whether to invest in the accelerated development of another similar project. In 2012, Israel Aerospace Industries signed a $195 million deal to plan, manufacture and operate the Amos-6 satellite – a price that has since increased.

Substantial technological improvements were introduced in the Amos-6 such as electric propulsion technology that allowed for the significant reduction of its weight and the cost of its launching, making it one of the most advanced satellites of its kind in the world.

A Blessing in Disguise?

IAI noted that Amos-6 was the largest and most advanced Comsat ever built in Israel:  “We’re saddened by the loss of the satellite and stand ready to serve Spacecom… The sector of communications satellites is strategic for IAI and for the state of Israel and we hope that the state will ciontinue to act for the good of preserving the knowledge that will allow continued production of communications satellites in Israel.”

Indeed, the loss of the Amos-6 communications satellite marked a strategic setback, but also opportunities, for the Israeli space industry, whose follow-on orders were threatened by the planned sale of Spacecom to a Beijing conglomerate.

Just last week in an Aug. 24 notice to its principal shareholders, Spacecom said it had agreed to sell the company for Xinwei Technology Group for $285 million in cash. The company noted that the sale was contingent upon the successful launch of the Amos-6.

Now, with that planned deal clouded by uncertainty, Israeli industry executives and experts say IAI may have greater chances of snagging an Amos-6 replacement order as well as follow-on contracts that may have gone to non-Israeli firms once the sale was complete.

Industry executives here said Spacecom has been in communication with US firms Boeing and Loral for price and availability data for its follow-on Amos-7 and possibly Amos-8 satellites.

Earlier this summer, Yossi Weiss, CEO and President of IAI, acknowledged that IAI will have to fight hard to keep Spacecom from going abroad to meet its follow-on communications satellite (Comsat) needs, just as the firm had to fight to clinch the Amos-6 deal more than three years ago.

“It’s a crisis and opportunity at the same time,” said Tal Inbar, head of space programs at Israel’s Fisher Institute for Air and Space Strategic Studies. “It all depends on the strength and financial resources of Spacecom.”

Inbar confirmed that if the deal with the Beijing conglomerate had gone ahead, chances were slim that the Amos-7 order would be awarded to IAI. Now, he said, it could be a different story. “If, after Spacecom gets the insurance money, they embark on an emergency buildup for a new satellite and if – and it’s a big if – the next satellite will be ordered from IAI, this could assure continued business for the state of Israel’s Comsat sector,” he said.

He added, “The big question is what will be Spacecom’s future plans. If they want to replace Amos-6 very quickly, they may opt to buy an existing satellite that is already in space.”

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