TIM FURNISS / LONDON

Unprecedented threat of court proceedings may lead to damages of more than $1bn

Boeing may have to pay over $1 billion in damages to insurers left out of pocket by power failures on six of its communications satellites. The news is the latest blow to the manufacturer's most troubled arm, already suffering from technical failings and the satellite slump.

Insurers say they may sue to recover the $1 billion-plus paid out on policies on six commercial communications satellites based on the Boeing Satellite Systems 702 spacecraft bus - the first time insurance companies have taken action against a company to recover payouts as a result of a generic problem on a spacecraft.

Six 702-based extremely high power satellites - PanAmSat (PAS) Galaxy XI and PAS 1R, Telesat Anik F1, Thuraya 1, a 702-based GEM model, and XM Satellite Radio 1 and 2 - were affected. All lost power due to contamination causing fogging on the solar panel concentrator arrays, which will eventually reduce power output from 18kW to 12kW. Customers were advised of the problem in 2001, and the concentrators were removed on later models.

PAS and XM made claims totalling $400 million, while Telesat filed a claim expected to be paid out this year. It is not known what action Thuraya may be taking.

Meanwhile, Jim Albaugh, Boeing Integrated Defense Systems president and chief executive, says that but for the company's heavy investment in the Sea Launch venture, he would consider pulling out. "If we could exit that business, we'd have to consider it, but clearly as long as we are breaking even, we'll continue to go forward."

Earlier, Boeing pulled the Delta IV out of the commercial business, citing the continuing depression in the commercial communications satellite business (Flight International, 22-28 July). This move, and thruster failures on its 602HP satellite bus, will cost it another $1.1 billion, the company says.

It has also lost 10 of its US Air Force Evolved Expendable Launch Vehicle (EELV) launch contracts as a result of using misappropriated Lockheed Martin material to bid for the original contract.

Boeing will not get the EELV contracts back, but Albaugh hopes the USAF will lift its ban on other Boeing launchers.

Source: Flight International