Sea Launch satellite venture files for bankruptcy protection

In another dose of bad news for Boeing, the Sea Launch satellite venture in which it holds a 40 percent stake sought bankruptcy-court protection Monday.

The Chapter 11 filing in U.S. Bankruptcy Court in Delaware says the Long Beach, Calif.-based company has debts exceeding $1 billion and assets of less than $500 million. Five affiliated companies also sought protection from creditors.

Sea Launch, which puts commercial satellites into orbit using an oceangoing platform or a former Soviet launch site in Kazakhstan, was created in 1995 by Boeing and partner companies from Russia, Ukraine and Norway.

Boeing itself is owed $978 million by Sea Launch, and the venture has stopped making debt payments to its investor-owners, court documents say.

During its development phase, the company incurred $119 million in cost overruns, according to a declaration by Sea Launch Chief Financial Officer Brett Carman.

It also suffered a malfunction during its 24th satellite launch in January 2007. That led to an indefinite delay in launching a Hughes Network Systems satellite, for which Hughes obtained a $52.3 million arbitration award against Sea Launch that could have been enforced after June 22. The Chapter 11 filing forestalls collection of that award.

After the launch malfunction in January 2007, further launches were delayed for a year, depriving the company of revenue. Since January 2008, the company has successfully launched seven satellites from its ocean and land platforms, the latest being a communications satellite from Kazakhstan's Baikonur Space Center.

But its results "have been negatively impacted by the worldwide economic recession, a glut of available launch spots offered by competitors, and the (company's) precarious finances," said Carman's statement.

Sea Launch will continue to run the business while exploring the sale of one or more of its units, the bankruptcy filing says.

Pentagon splits

combat program

The Pentagon on Tuesday canceled the $159 billion Future Combat Systems project of manned and unmanned vehicles joined by a wireless network, splitting it into five programs, according to Undersecretary for Acquisition Ashton Carter.

Boeing was the lead contractor on the system and will retain that role on only one program, which involves overseeing construction of communications networks, robots and drones as well as ground sensors for detecting an enemy, Carter said in an interview.

This contract will apply to only seven of the Army's 73 active-duty and National Guard combat brigades. Boeing will be required to compete for the other four programs, which apply to the remaining 66 brigades, he said. No values have been assigned to any of the five programs.

Carter, in a memo signed Tuesday, formally ended what was the Pentagon's second-most-expensive program behind the Lockheed Martin F-35 Joint Strike Fighter, which is projected to cost $298 billion.

Defense Secretary Robert Gates said April 6 that he would terminate the $87 billion vehicles component of the Future Combat Systems that's managed by Boeing and SAIC of San Diego.

Carter in the memo directed the Army to "identify the most efficient means to cease the manned ground vehicles program" with "the least cost to the taxpayer."

Bloomberg News