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Boeing Enters Satellite Venture

December 9, 1999

LOS ANGELES (AP) _ In a deal worth roughly $500 million that gives a small boost to its troubled Delta III rocket program, Boeing Co. will put 40 telecommunications satellites into orbit for Skybridge LP, a venture led by France’s Alcatel Space.

Boeing agreed to invest as a minority partner in Skybridge as part of the Thursday agreement, which calls for the satellites to be lifted into space aboard Delta III and Delta IV rockets.

The new business won’t reverse recently announced layoffs of 188 workers in Boeing’s Southern California aerospace operations, due to a slowdown in the commercial satellite industry.

But it provides a needed vote of confidence in the Delta III, which so far has failed to successfully put a satellite into space.

``I think it does suggest they feel Boeing will put (the rocket’s failures) behind them,″ said Paul Nisbet, an aerospace industry analyst with JSA Research Inc. ``They haven’t yet flown it successfully, so you can hardly say for sure the problems will indeed be put behind them,″ he added.

Skybridge plans to create an 80-satellite network that would provide high-speed transmission services to Internet service providers and other telecommunications businesses.

Terms of the deal with Boeing were not disclosed. Skybridge, however, expects to pay about $1 billion to put all 80 satellites into orbit, said Skybridge spokesman Nicholas Brun. Boeing is under contract to do half the work, he said.

The total cost of the Skybridge project is about $4.8 billion.

Brun declined to say how much Boeing invested in Skybridge, but analyst Nisbet estimated that the stake probably cost Boeing several hundred million dollars.

Such investments have become common among aerospace companies competing to provide launch services since two other global communication networks, Iridium and ICO Global Communications, sought bankruptcy protection, Nisbet said.

Iridium and ICO focused on creating expensive wireless telephone networks.

``These investments are quite common. It’s the way the commercial space business is being run. If you want to play, you invest,″ Nisbet said.

Under the deal, two Delta III rockets will each carry four Skybridge satellites into orbit. Four of Boeing’s larger Delta IV rockets each will carry eight more satellites into space. Skybridge has options for additional launch services if needed.

The 80 satellites will be launched in 2002, Brun said. Contracts for launch of the other 40 are still being negotiated.

The agreement raises the number of scheduled Delta III launches to 20, said Erin Lutz, a Boeing spokeswoman.

The Delta III has been launched only twice, failing both times. The first Delta III, launched Aug. 26. 1998, exploded shortly after liftoff, while the second rocket, launched May 4 of this year, did not deliver its payload to the proper orbit. The rocket is scheduled to resume service in early 2000.

The Delta IV rocket is currently in development, with the first launch slated for some time in 2001.

Boeing isn’t the only company plagued by launch failures. Over the past two years, the launches of three Lockheed Martin Titan IV rockets have failed.

An Air Force study has blamed problems at both companies on faulty workmanship and engineering.