Sea Launch files for Chapter 11 protection

[Jim]

 
Perhaps it could sell off its payload processing work?

There isn't any payload processing work.  Astrotech runs the facilities in Long Beach and the spacecraft customers process their own spacecraft (industry SOP).  Sealaunch didn't perform any hands on work on the spacecraft.

[vt_hokie]

Ten years without making any profit according to Boeing 8K filings.

My business would not have survived that long with similar results.

Loral hasn't made a profit in at least a decade.  I don't know how companies manage to survive that long without profitability, but they do.  I'm amazed that Sirius-XM is still in business, but it is!

[Patchouli]

If they go into Chapter 7 Orbital could pick up their launch platform for cheap.

I figure if anyone would want the launch platform and and command ship I figure it would be ULA or Spacex.

ULA might even want the Zenit 3SL for payloads too heavy for a Delta II but not worth using an Atlas or Delta IV.
Zenit is a very cheap LV it has the lowest cost per Kg until F9 flies.

Spacex they do plan on launching F9 from Omelek but I really don't see how they'll add the facilities easily.

Of course it's not plug and play but that doesn't mean it might not be worth while to convert.

Somewhat related I wonder what will happen to all that Ares I upper stage tooling and J2X when that booster gets canceled?

As for Tesla getting a GM plant I hope they do I really want a Tesla S.

[Jim]

I figure if anyone would want the launch platform and and command ship I figure it would be ULA or Spacex.

ULA might even want the Zenit 3SL for payloads too heavy for a Delta II but not worth using an Atlas or Delta IV.
Zenit is a very cheap LV it has the lowest cost per Kg until F9 flies.

Spacex they do plan on launching F9 from Omelek but I really don't see how they'll add the facilities easily.

Bad conclusions.  Neither would want it.

Zenit is not a cheaper LV when used on Sealaunch.  Also if used for Delta II class payloads, the cost per Kg would be high.  Atlas V would be cheaper than Zenit for Delta II class.

Zenit would bring nothing to ULA except debt.  There is no advantage to ULA, period.  The shutdown of Sealaunch would be more beneficial to ULA, since it removes a competitor.

Again, Spacex wouldn't want the platform since it has high overhead, which goes against their MO.  F9 from Omelek is high improbable, VAFB is more likely

[yinzer]

If Sea Launch was really running operating losses (cost them more to launch the rocket than people would pay them, before any sunk costs), then they should be liquidated, even if it's for pennies on the dollar.

If they were just unable to pay back their development costs and the cost of refurbishing their launch platform, then restructuring makes sense.

Note: this kind of thing shows why the launch market is so screwy.  When you bought a flight on Sea Launch, you paid $100M and Sea Launch's bankers paid $50M (although they didn't realize it at the time).

[Blackstar]

Assuming that they are possibly going extinct, it might be wise for someone to collect up relevant documents and photos on them.  Is it still possible to get hi-resolution (print quality) photos of their launches and operations?

Otherwise, they vanish and it gets harder for anybody to write about their history.  Typical problem for commercial history.

[kfsorensen]

Again, Spacex wouldn't want the platform since it has high overhead, which goes against their MO.  F9 from Omelek is high improbable, VAFB is more likely

SpaceX already has planned F9 launches from Omelek on their books.  They'll never use VAFB again after the way they were treated.

If I were SpaceX I'd offer Sea Launch a sweet deal to pick up the Commander and use it to transfer F9s to the loading dock at Omelek.  Transferring rockets right there in the lagoon of Kwajalein would not be difficult because of the relatively still water.  They could use the Commander, off the coast of Omelek, as the launch control center and the internals of the Commander as the vehicle processing facility.

[Jim]

SpaceX already has planned F9 launches from Omelek on their books.  They'll never use VAFB again after the way they were treated.

You haven't visited their website lately.  F9 is going from VAFB.  Logistics at Omelek are too costly.  Also any real polar customers are going to want VAFB.

[kfsorensen]

SpaceX already has planned F9 launches from Omelek on their books.  They'll never use VAFB again after the way they were treated.

You haven't visited their website lately.  F9 is going from VAFB.  Logistics at Omelek are too costly.  Also any real polar customers are going to want VAFB.

No it's not.  Trust me.

[Jim]

No it's not.  Trust me.

They are telling us it is.

[SIM city]

If Sea Launch was really running operating losses (cost them more to launch the rocket than people would pay them, before any sunk costs), then they should be liquidated, even if it's for pennies on the dollar.

If they were just unable to pay back their development costs and the cost of refurbishing their launch platform, then restructuring makes sense.

Note: this kind of thing shows why the launch market is so screwy.  When you bought a flight on Sea Launch, you paid $100M and Sea Launch's bankers paid $50M (although they didn't realize it at the time).

The rocket and upper stage were developed by the soviet union.  I doubt the development cost for the 3SL configuration were that high.  In all of this math, don't forget the $1 billion Boeing already wrote off on the venture.  That should have covered any development costs for the vehicle, facilities, et al.

[nooneofconsequence]

1. If Sea Launch was really running operating losses (cost them more to launch the rocket than people would pay them, before any sunk costs), then they should be liquidated, even if it's for pennies on the dollar.

2. If they were just unable to pay back their development costs and the cost of refurbishing their launch platform, then restructuring makes sense.

3. Note: this kind of thing shows why the launch market is so screwy.  When you bought a flight on Sea Launch, you paid $100M and Sea Launch's bankers paid $50M (although they didn't realize it at the time).

1. If this *was* to be a business, then it wasn't and shouldn't. They'd be lucky to get a fraction of a penny on the dollar if you look at this real closely - which is in part why investing in space ventures historically is stupid - the assets aren't liquidable. If you don't believe me talk to anyone who had stock in useless things like Kistler.

If it *wasn't* a business but an accommodation done in the form of a business, it doesn't matter. They'll find someway of getting the accommodation going again.

2. Don't forget the double depreciation loss incurred by needing to repair the platform from the explosion. And we have no idea what (if any) the insurance coverage/payoff was as well.

3. Simply the current working cost of capital in this market. How else do you think that insurance and financial stocks got to be so overvalued in the past 3 decades?

[McDew]

From a Boeing 8K filed with the SEC today:

"The Chapter 11 Filing constituted an event of default or otherwise accelerated approximately $448 million of outstanding indebtedness of Sea Launch for which Boeing and the other Sea Launch partner issued guarantees. As a result, these guarantees to certain creditors of Sea Launch became due and payable. It is Boeing’s intention to perform its obligations under its guarantees.

Among other options, Boeing has a right to reimbursement from Sea Launch as well as rights to reimbursement from all of the other Sea Launch partners, who are each obligated to reimburse Boeing so that Boeing contributes no more than its proportional ownership percentage (40%) in Sea Launch of the aggregate guarantee payment obligations. Boeing intends to pursue vigorously all of its rights and remedies against Sea Launch and the other Sea Launch partners.

Boeing’s expected pre-tax charge to earnings in the second quarter of 2009 related to Sea Launch’s Chapter 11 Filing is approximately $35 million. In the event Boeing is unable to secure reimbursement from Sea Launch or the other Sea Launch partners related to Boeing’s payment under the credit guarantees or previously made loans to Sea Launch, Boeing could incur additional pre-tax charges of up to $478 million."

Looks like Boeing finally plans to sink Sea Launch after keeping them afloat for the past 10 years.

[vt_hokie]

This occurred after Loral screwed up with Globalstar, where a customer tried to force an acquisition of part of its operations so as to deny other customers by making an exclusive arrangement. Only recourse was a Chapter 11 filing to address the misuse of the contract. It was avoidable otherwise.

Happens a lot in aerospace.

I don't know the entire story, but I was under the impression that Loral went Chapter 11 and simultaneously sold much of its profitable FSS business to Intelsat in order to make a dent in the unsustainable debt load that resulted almost entirely from the Globalstar debacle. 

Regarding Sea Launch, while they plan to continue operations and launch the existing backlog, can we safely assume that new customers are unlikely at this point?

[McDew]

Regarding Sea Launch, while they plan to continue operations and launch the existing backlog, can we safely assume that new customers are unlikely at this point?

Their quoted backlog is inflated with contracts in default/termination/options.  By my calculations Sea Launch only has a backlog of 3 missions (W7,XM5 and IS17). 

Kind of hard to continue operations when you stopped paying your suppliers for hardware.  The Zenit they shipped to Long Beach for a planned October launch of W7 is missing major components which were never ordered / paid.  I don't see that vehicle being ready for a long time unless they steal hardware from the Federal programs which is highly unlikely.  Lead time for new rockets is 24 months with cash on the table.  You never get to operations and launch without hardware in the production line.

[Seer]

It's convenient that Ariane 5 is upping its launch rate to eight a year.
That can absorb four satellites from Sea Launch, leaving one more to go to Proton or another launch company.
Is it possible that Ariane 5 might increase production further? Does anyone know how easily production capacity can be increased?

[madscientist197]

I think it's largely batch production. So the actual capacity is probably quite high.

[nooneofconsequence]

I wouldn't presume so much here.

The real issue is are Zenit 3SL's as marketed a desirable business to continue. If not, they won't. If so, then they will.

If you can only have 3 customers for the next 1-3 years, the answer is *no*.

As to Ariane expanding production to accommodate need, they aren't nearly as flexible as there are expectations of continued production rate with ramping - contractual issues dealing with the supply chain.

[veryrelaxed]

Aren't Ariane 5's launches expensive as well?  What are their debts/debt holders?  If not for the 'inside sat business'  (Alcatel?) or French gov and ESA subsidies it'd be hanging by a thread now as much as SL.  I don't see anything economical or competitive in the Arianne technically or business-wise.  Perhaps the 'double GSO sat launch' feature?

[Seer]

Aren't Ariane 5's launches expensive as well?  What are their debts/debt holders?  If not for the 'inside sat business'  (Alcatel?) or French gov and ESA subsidies it'd be hanging by a thread now as much as SL.  I don't see anything economical or competitive in the Arianne technically or business-wise.  Perhaps the 'double GSO sat launch' feature?

There the market leader by far and they're increasing production. Most of their orders come from outside France, and the launch subsidies are about $200 million. Far less than Atlas or Delta.