The directional signs aboard the odd-looking platform docked at the Port of Long Beach are in both Russian and English.
That’s because the rockets that are hurtled into space from the converted oil rig and a companion command ship are designed and manufactured in the former Soviet Union.
These days those signs are looking to be handier than ever.
Sea Launch Co. LLC, a joint venture started by Boeing Co. that launches commercial satellites from the middle of the Pacific Ocean, is expected to emerge next week almost wholly owned by Russians after 15 months of bankruptcy.
The company, which has launched satellites for El Segundo-based DirecTV and other telecommunications firms, went into a financial tailspin last year after failed and scrapped launches and a slowdown in the satellite business.
But a Delaware bankruptcy judge is expected to approve its reorganization plan July 27, and the company is poised to blast off again.
“We are very eager to move forward,” said Sea Launch President Kjell Karlsen in an interview at his Long Beach headquarters alongside the ported ships. “This last year has been difficult. Now we’re looking toward the future.”
The company hasn’t launched a rocket from sea since April 2009, a month before it declared bankruptcy. Since then, the Odyssey launch platform and Sea Launch Commander ship have been idle, and a Long Beach work force that numbered 175 has been reduced to about 50.
Under the reorganization plan, a subsidiary of Russian aerospace giant Energia, which owned 25 percent of the company and manufactures its Zenit rockets, will increase its ownership stake to 95 percent in exchange for $140 million in cash. In addition, the company will kick in $200 million in working capital.
Boeing, which owned 40 percent of the venture and built a rocket component that holds the satellite payload, will share the remaining ownership with the other founding partners: Norway’s Aker, which engineered the launch platform and command ship, and Yuzhmash/Yuzhnoye Sdo, a Ukraine company that designed other rocket components.
The good news for Los Angeles County, Karlsen said, is that despite the ownership change and some industry doubts about the company’s future, Sea Launch will remain headquartered in Long Beach and continue to launch from the Pacific. (The company also launches from the Central Asian country of Kazakhstan.)
Assuming the reorganization plan is approved, the company will spend most of August and September transferring its licenses to the new legal ownership entity, with the next launch scheduled for the third quarter of 2011. Sea Launch hopes to begin hiring local engineers, technicians and other workers early next year.
The company’s creditors – including satellite operators Sirius XM Satellite Radio, SkyTerra and Hughes Communications, which lost millions due to unfulfilled contracts – are taking settlements of roughly 18 cents on the dollar. Sea Launch plans to court them to continue launching.
“We’re trying to bring them back as customers,” Karlsen said.
Rockets away
Sea Launch was founded in 1995 by Boeing as a way to get the geostationary satellites it manufactures for clients at its nearby El Segundo plant into orbit more cost-effectively. The satellites orbit the Earth 22,300 miles above the equator, remaining in a fixed position relative to Earth, where they relay television, radio and other signals during their expected 15-year orbits.
By launching the 13,000-pound satellites from a spot along the equator south of Hawaii, Sea Launch saves millions of pounds of rocket fuel compared with satellites launched on land away from the equator.
The first launch took place in 1999, followed by nearly 30 successful launches for DirecTV, EchoStar, Telstar, Intelsat and other customers. However, the operation has significant costs.
First, the three-stage rockets are manufactured in Russia and the Ukraine before being flown in a cargo plane to Long Beach Airport, where they are taken for final assembly to the hold of the 667-foot-long Sea Launch Commander ship. The rockets are then transferred to the launch pad prior to departure from Long Beach, with each vessel manned by separate crews powering their way to the South Pacific.
Three hours before launch time, the 70-member Odyssey crew is transferred by helicopter to the commander ship stationed two miles away in the open sea. Russian and American operators monitor the launch from a control room aboard the ship.
“It’s always tense and it’s tenser if you’re the one who has to give the final go,” says Daniel Dubbs, 59, the company’s vice president of operations who has overseen many launches.
(There are some oddities. Nearly two decades after the end of the Cold War, federal regulations still require that citizens of the former enemy nations be kept on separate sides of the room during countdowns to avoid sharing some of the U.S. high technology that has not been approved for transfer.)
“The tension comes because you know the consequences of failure,” Dubbs said of the launches. “You’re not delivering 10,000 cars, you’re delivering a single rocket. While you can afford to lose a car, you can’t afford to lose the rocket.”
In fact, that’s exactly what happened Jan. 30, 2007, when a Zenit-3SI rocket lost power just seconds after ignition, exploding on the launch pad, destroying a satellite owned by a Dutch telecommunications firm and causing damage to the platform.
“Everything had progressed normally,” recalled Dubbs, who was in the control room at the time. “We had a call for liftoff, and then things didn’t go so well. The rocket went up about 18 inches, lost thrust almost immediately and descended.”
The company, which had a backlog of three launches at the time, suspended operations for seven months to conduct an investigation that eventually blamed the mishap on a faulty engine pump. Another attempted launch the same year had to be put off due to strong ocean currents. Then the recession hit, causing telecommunications firms to pull back.
‘Perfect storm’
“It was like the perfect storm,” said Paula Korn, a Sea Launch spokeswoman. “The economic situation evolved to where customers had to delay their launches due to funding.”
Despite its successful launches, some in the industry question whether the company’s business model – which requires millions to be spent shipping the rockets and steaming to the equator – is viable. Some say it would be easier – with Moscow-based Energia soon to own 95 percent of the company – for launches to take place in Kazakhstan.
Boeing, in giving up its dominant stake in the venture, has publicly acknowledged Sea Launch was never profitable, though it has committed as part of the reorganization to continue to use it to launch satellites it makes for telecommunications customers.
Keith Volkert, chief executive of Satellite Consulting Inc. in Palos Verdes Peninsula, is not one of the doubters. He believes that Sea Launch is a viable enterprise as structured.
“They’ll leave things as they are,” he predicted of the ownership transfer. “I’m optimistic. I think they’re going to be back in the game, and competition in launch services is good for everyone.”
Among its competitors is International Launch Services of Reston, Va., which has been majority owned by a Russian company since 2006; it launches from Kazakhstan. Its other major competitor is Arianspace, a European consortium headquartered in France that launches near the equator from French Guiana in South America.
A third company, Space Exploration Technologies, or SpaceX, is a startup based in Hawthorne and owned by PayPal entrepreneur Elon Musk. The company only recently recorded its first successful test launch.
While Sea Launch is not a huge revenue generator for the Port of Long Beach, port spokesman Art Wong said he would hate to see the operation leave its base of operations on Nimitz Road at the far reaches of the port.
“It’s important in that it supports the aerospace industry in this region. In terms of telecommunication, it’s important that we have this resource here,” he said.
The newly constituted company, according to Karlsen, already has about $1 billion worth of backlogged orders, including one signed this month with Hong Kong-based Asia Satellite Telecommunications Co., Asia’s leading satellite operator.
In addition, he said, the company is holding “high-level discussions” with NASA regarding possible U.S. government contracts. The company’s goal is to launch four to five satellites per year by 2012, generating $400 million to $500 million in annual revenue.
“We’re excited,” he said. “We look forward to the coming years.”
