The recent failure of a Russian Proton rocket has put back plans for the global launch of Inmarsat’s Global Xpress Ka-band connectivity service. But has the market overreacted? Steve Nichols takes a look.
A Russian Proton launcher failed to place a Mexican satellite in orbit on Saturday 16 May. According to reports, its third-stage booster accidentally switched off at a height of 161km (100 miles), resulting in the satellite being destroyed somewhere in Kazakhstan.
Inmarsat was next in line to use a Proton to loft its third Boeing-built Inmarsat-5 satellite into orbit over the Pacific, completing the required trio of satellites needed to give global coverage. No firm date for the launch had been given, but it was understood to be “early June”.
But this latest Proton failure, and the resultant investigation, means that the global launch will be delayed, although no one can put a new date on it.
Rupert Pearce, CEO of Inmarsat, speaking about the planned ILS launch of Inmarsat-5 F3, said: “This incident involving a failed Proton launch from the Baikonur Cosmodrome is extremely unfortunate and will inevitably delay our launch plans for our third Global Xpress satellite.
“This is the third time our Global Xpress programme has suffered launch delays because of Proton launch failures. Although in the past, Proton has returned to flight within a few months of a launch failure, it will not be possible to determine the length of the delay in the launch of I-5 F3 until the cause of the Centenario launch failure is established.
“Customers are understandably anxious to see the delivery of GX services on a global basis, and as soon as we have sufficient information to ascertain the new launch date for I-5 F3, we will make the information public, as well as comment further on the impact of the delayed launch.
“Meanwhile, we are pleased by the strong interest in GX services across many customer constituencies and buoyed by early revenues from I-5 F1, which is in service over EMEA and Asia, and by the successful delivery of I-5 F2 into orbit over the Americas.
“We are also reassured that I-5 F4 is currently under construction by Boeing in California, and remains on schedule for completion in mid-2016, with a potential SpaceX launch in the second half of 2016, providing us with significant mission assurance in the case of any protracted delays in Proton’s return to flight, or a failed launch of I-5 F3.”
But the financial market responded badly to the news. Inmarsat’s UK share price closed on Friday 15th May at 995.5p. But at the market opening on Monday 18th it was down to 955p – a drop of 4%.
It recovered a little to 967p by close of play on Monday, but its performance remained lacklustre all week, finishing at 971.50 on Friday, down 2.4% on the previous Friday.
The news has been been full of stories about the launch failure, with Inmarsat saying it expects the delay to result in a small negative impact on its 2015 revenue and earnings.
As Reuters said, Inmarsat has suspended its guidance of an 8 to 12 percent compound annual growth rate in wholesale mobile satellite services revenue over 2014-16, but said its broader guidance of $500 million of additional revenue from GX within five years remained in place.
Inmarsat’s GX team was also spooked by one news outlet that got the wrong end of the stick and said that its I-5 satellite had been lost in the crash!
So, having looked at an overview of the delay, let’s look at some specifics. Is the news really that bad?
Inmarsat has two of its satellites in orbit, with Inmarsat-5 F1, which serves Europe, Africa, Asia and half of Australia, in place and working well.
Inmarsat-5 F2, which serves North and South America, and the Atlantic region, is in space, but not quite in service just yet.
Honeywell is about to start its inflight GX antenna testing programme using its Boeing 757 test bed. Initial testing will be done in Europe using I-5 F1, although later testing may be done in the US with I-5 F2. Ground-based antenna testing has already been taking place from Honeywell’s Tewkesbury facility.
The first STCs should be forthcoming around the end of the year.
So the terminals and antennas were never really going to be ready to be installed commercially until the end of 2015 anyway.
And as OnAir’s COO Stephan Egli told me at EBACE this week, the lead times for equipping aircraft are so long that we can’t really expect to see any GX-equipped commercial aircraft for a further 12-18 months at the earliest.
Carl Esposito, Honeywell’s VP Marketing and Product Management, was even more sanguine. “The two current Inmarsat GX satellites can cover around 80% of the world’s traffic on their own. Obviously the Pacific I-5 F3 satellite will complete the constellation, but most of any aviation revenue will be earned over the US, the Atlantic, Europe and Africa.
“We don’t see any big impact on the service to be honest.”
Another factor relates to the orbital slot that the Pacific-based I-5 F-3 needs to be launched into. An Inmarsat spokesperson told me that after launch it will be in position in about one month, not the three months we saw with the previous two satellites.
This is a fact of orbital mechanics apparently as it will be easier to place this satellite into its 178 degrees west geostationary slot from Baikonur.
And why did Inmarsat go for ILS in the first place? An insider told me that it was down to two factors – cost and availability. They said that it would have cost twice as much to have the satellites launched with Arianespace, and the lead times would have been much longer.
Hindsight is a marvellous thing, but I would imagine that the decision to go with ILS has been questioned ever since!
One of the main problems has been public perception. Inmarsat has always maintained that Global Xpress would be launched as a global service once all three satellites were in place. It could have easily said that the service would be rolled out continent by continent, but chose not to.
As it is, we don’t know just how long the I-5 F3 launch delay will be, so will Inmarsat “launch” its service with just the two satellites, or will it wait until all three are in service?
Only time will tell, although I think the Inmarsat-5 F3 satellite will be in position long before we see any aircraft rolling out of Airbus/Boeing with GX Aviation equipment fitted, or bizjets with Honeywell’s JetWave equipment for the equivalent Jet ConneX (JX) service.