Amos Satellite Contract Eludes Israeli State-Owned Aerospace Company

Israel-based satellite operator Space Communication Ltd. has signed a $112 million contract for the design and manufacture of a new satellite, to be called AMOS-8, the company announced Sunday.

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The contracted company is Palo Alto, California-based Space Systems/Loral LLC, a spacecraft and communication systems manufacturer that lists NASA as one of its customers. According to its website, Loral manufactured over 270 satellites to date and has over 80 geostationary satellites currently in orbit.

This is Spacecom's eight contracted satellite, and only the third to not be manufactured by state-owned Israel Aerospace Industries Ltd. (IAI). AMOS-6, built by IAI and operated by Spacecom exploded in September 2016 on its launch pad after its carrier, a SpaceX Falcon 9 rocket, malfunctioned during pre-checks. IAI was left struggling in its wake as due to a disagreement regarding the satellite's insurance policy, and in January has filed a lawsuit against the insurers concerning further compensation. AMOS-6 was contracted by Facebook to supply web access in Africa, and its destruction brought on a fallout between the social network and SpaceX.

As a result Space Communications lost a $95 million leasing deal with Facebook, and was forced to lease another satellite, renamed AMOS-7, to make up for the loss of AMOS-6, at $22 million a year, leaving it in a problematic financial situation. In the wake of this series of events, the planned $285 million acquisition of the satellite operator by Shanghai-listed telecommunication technologies supplier Beijing Xinwei Technology Group Ltd.was called off.

Spacecom has stated it intends to raise the money to finance AMOS-8 from the public, for institutional investors, and from banks.

AMOS-8 is intended to replace AMOS-7, which has been leased for four years. The new satellite will provide coverage for the Middle East, Europe, and Africa.

Under the terms of the contract, Loral will deliver the finished satellite within 27 months of the advance payment, and will provide support for as long as it remains in orbit. The $112 million agreed upon will be paid over several years depending on certain milestones and on the Satellite's performance once in orbit. Loral will also participate in the satellite's insurance policy both before and after its launch.

Spacecom can also contract Loral for a second satellite at a predetermined price within a specific but unspecified timeframe.

The contract is the second time out of only three times in which Space Communications contracted a company other than IAI to build its satellites. In November 2015, the company’s AMOS-5, manufactured by two companies from Russia, and Italy and France, stopped responding to communication while in orbit, most likely due to generator malfunction. Launched in December 2011, it was expected to have a lifespan of 15 years.

In December 2016, Space Communication contracted Boeing Satellite Systems International, to build a replacement, to be called AMOS-17.

In October, Spacecom announced it has signed a contract with SpaceX for the launch of AMOS-8 in 2020, and of AMOS-17 in the second quarter of 2019.

In January, a report issued by the Israeli parliament found that the Israeli satellite industry has been struggling to pull together after the 2016 explosion. The government is partially financing AMOS-8.