Boeing’s Contract May Hit $1 Billion
By Muhammed El-Hasan DAILY BREEZE
Boeing Co. won a satellite contract worth up to $1 billion, the biggest commercial contract for the company’s El Segundo-based Satellite Development Center in nine years, the defense firm said Wednesday.
Boeing will build three of its 702 satellites, the company’s largest model, and associated ground systems for Renton, Va.-based Mobile Satellite Ventures.
Mobile Satellite plans to use the geo-mobile satellites to create what it describes as the world’s first commercial mobile satellite service based on both space and terrestrial elements. The service will be for North and South America.
In a conference call, Mobile Satellite’s chairman and CEO Alexander Good said the contract is worth between $500 million and $1 billion.
The new contract won’t lead to additional jobs in El Segundo, Steve O’Neill, Boeing’s vice president of commercial and civil satellites, said in an interview.
About 5,600 employees work at Boeing’s El Segundo satellite facility.
The contract carries options for additional satellites, O’Neill said.
Boeing last won an order of this size in 1997.
In that deal, the Boeing satellite unit, then known as Hughes Electronics Corp., won a contract valued at the time at $1 billion to deliver two satellites to Thuraya Satellite Telecommunications Co. of the United Arab Emirates.
That was before the commercial satellite market began to tank in about 2000.
With a limited global market, Boeing won no commercial satellite contracts last year, although it’s competing to build a satellite for the National Oceanic and Atmospheric Administration.
While a positive sign for the industry, the Mobile Satellite contract doesn’t represent a return to the commercial boom the 1990s, O’Neill said.
“My best guess is this year, there’s going to be around 15 to 20 commercial telecommunication satellites. That’s a little more than last year,” O’Neill said. “If you look over, say, the next decade, the industry people who forecast it say it will stay within this range of 15 to 20.”
The commercial satellite market will grow “very modestly,” said defense analyst Paul H. Nisbet, of JSA Research Inc. in Newport R.I.
“It’s come back some,” Nisbet said. “But it’s not anywhere near the 35 to 40 that we had before the slump began.”
The three satellites for Mobile Satellite will represent a low risk for the company since the technology resembles that used in the successful Thuraya satellites, O’Neill said.
During the conference call, Good said, “In large part, we selected the Boeing Co. because of the reliability that we felt they could provide to these satellites.”
Chicago-based Boeing’s stock price rose $1 Wednesday to close at $70.10 on the NYSE.