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Satellite Owner Says SpaceX Owes $50 Million Or Free Flight (reuters.com) 239

An anonymous reader quotes a report from Reuters: Israel's Space Communication Ltd said on Sunday it could seek $50 million or a free flight from Elon Musk's SpaceX after a Spacecom communications satellite was destroyed last week by an explosion at SpaceX's Florida launch site. Officials of the Israeli company said in a conference call with reporters Sunday that Spacecom also could collect $205 million from Israel Aerospace Industries, which built the AMOS-6 satellite. Spacecom has been hit hard in the aftermath of the Thursday explosion that destroyed the SpaceX Falcon 9 rocket and its payload. The Israeli company said the loss of the satellite would have a significant impact, with its equity expected to decline by $30 million to $123 million. Spacecom shares dropped 9 percent on Thursday, with the explosion occurring late in the last trading day of the week. Trading in the shares was suspended on Sunday morning, and the stock plummeted another 34 percent when trading resumed. In a conference call with reporters, Spacecom's general counsel Gil Lotan said it was too early to say if the company's planned merger with Beijing Xinwei Technology Group would proceed. Xinwei last month agreed to buy Spacecom for $285 million, saying the deal was contingent on the successful launch and operation of Spacecom's AMOS-6 satellite. The $200 million AMOS-6 satellite that perished in the explosion belonged to Facebook and was going to be used to beam internet to developing parts of the world.
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Satellite Owner Says SpaceX Owes $50 Million Or Free Flight

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  • by ihtoit ( 3393327 ) on Tuesday September 06, 2016 @02:04AM (#52832877)

    Launching doubly so. OK this was a ground test of the engines. We still don't know what caused the explosion.

    And hey, wasn't the satellite INSURED??

    • Re: (Score:3, Insightful)

      by kuzb ( 724081 )

      Who in their right mind would insure a satellite of that cost for flight on an experimental vehicle? I can't see any insurance company betting on something that high risk.

      • by mwvdlee ( 775178 ) on Tuesday September 06, 2016 @02:13AM (#52832897) Homepage

        There are insurance companies that do, but the premiums skyrocket.

        • You could even say that they are astronomical.

        • Car insurance makes sense, because car accidents are very seldom compared to the big number of car drivers. If you are involved in an expensive car accident, you shouldn't have to sell your house and everything you own and live in poverty just because of that single accident, which may have been bad luck. Rather, those costs are distributed over the number of insurance customers.

          For spacex, it makes no sense to be insured: there are maybe two or three companies in the world that offer the services spacex of

          • Have you forgotten the multiple Ariane Rocket failures?
            It happens to everyone in the space industry.
            • It's possible to have rocket launch failures where the rocket doesn't explode. And even if it does explode and they have enough warning, e.g. the Apollo craft had the Launch Escape System [wikipedia.org] to get the payload (including astronauts...) out of harm's way.

      • Everyone who can assess the risk. Premium is payout * expected risk + profit.

        You can insure anything. If you're willing to pay the premium. You can even insure something against an event that will certainly happen, just be prepared to pay a premium higher than the damage.

      • by Richard_at_work ( 517087 ) on Tuesday September 06, 2016 @03:54AM (#52833133)

        What makes the Falcon 9 an "experimental vehicle" any more than any other launch system?

        The Falcon 9 has had 27 successful launches and 2 failures in 6 years. It has had three major variations in that time (v1.0, v1.1 and FT).

        The Ariane 5 has had 83 successful launches and 2 failures in 20 years. It has had five major variations in that time (G, G+, GS, ECA and ES).

        The Atlas V has had 60 successful launches and no failures in 14 years. It has had nine major variations which have flown in that time.

        I'm not seeing anything which would put the Falcon 9 into a higher risk band than its contemporaries...

        • by mlw4428 ( 1029576 ) on Tuesday September 06, 2016 @09:50AM (#52834357)
          > I'm not seeing anything which would put the Falcon 9 into a higher risk band than its contemporaries...

          Really? Are you sure? I can see that, at its best, Falcon has had nearly 4 times fewer flights and matches the number of failures in a shorter lifespan than Ariane 5. And that's with the contemporaries introducing more variations. That's putting Falcon 9 at somewhere between 33% and 45% more failures than its two contemporaries. What metrics do you look at to determine risk? Everything I'm looking at says that Falcon 9 is a poor gamble, at best.
          • The number of failures doesn't make a vehicle "experimental", and the point of the figures is to show that the Falcon 9 is launching pretty much on the same cadence as two very-much-not experimental rockets.

            The Falcon 9 is no more experimental than either of the two examples I give.

            On another note, you say that the Falcon 9 has had nearly 4 times fewer flights and matches the number of failures in a shorter lifespan than the Ariane 5. This is true.

            Its also totally misleading, because the Ariane 5 had had b

          • Falcon has had nearly 4 times fewer flights and matches the number of failures in a shorter lifespan than Ariane 5.

            There's this thing called math that shows across the variants the Ariane 5 on average has had less than double the number of successful launches than a Falcon 9 which incidentally has had a higher number of successful launches per variant than the Atlas V.

            You missed that key word "variant", a variation or change in design that makes a ship different to the previous one. Based on the this Atlas V is more experimental than the Falcon 9.

            • You missed that key word "variant", a variation or change in design that makes a ship different to the previous one

              Is that change in a design, like the logo painted on the side? Or a completely new engine subsystem? My guess is that it's much closer to the former.

        • https://en.wikipedia.org/wiki/... [wikipedia.org]

          In reality the people working on the Ariane family have a far longer experience at launching a sat, and THAT count for a lot. SpaceX may have quite a few launches, but nothing on the historical track records various space agencies have. Number of launch is not everything.
      • And yet, Spacecom is going to be getting ~$200M from insurance on that satellite already. Not sure whether the payout covers just the physical satellite, or the whole shebang, mind you. So this "$50M or free flight" may just be them trying to save themselves the money that they paid SpaceX for the launch....
        • by Teancum ( 67324 )

          So this "$50M or free flight" may just be them trying to save themselves the money that they paid SpaceX for the launch....

          It has an even easier explanation:

          This was something in the launch contract and a previously agreed upon penalty that would happen if the launch didn't happen. Spacecom is just stating publicly that this clause exists.... something that seems prudent if they are trying to assure their investors that they can financially recover from this disaster.

      • On the other hand, who in their right mind launches a satallite of that cost for flight on an experimental vehicle without some kind of insurance?

        Whether it's technically "insurance", I can't see a company putting such expensive equipment at risk, even the risk of a conventional launch, without a plan of what happens when things go wrong. Even in the case that it's a high-stakes gamble, there should be legal agreements spelling out liability, and exactly what SpaceX is responsible for.

        Also, I could see a

      • Who in their right mind would insure a satellite of that cost for flight on an experimental vehicle? I can't see any insurance company betting on something that high risk.

        Insurance, corporate gambling where the house (almost) always wins. I'd self insure my car if it wasn't for regulations and the possibility of getting successfully sued for hitting someone if they run a red light.

      • by Teancum ( 67324 )

        Who in their right mind would insure a satellite of that cost for flight on an experimental vehicle?

        First of all, how is this an experimental vehicle and how do you jump to the conclusion that it is such? What was done in this particular SpaceX flight was to do the equivalent of somebody sitting down and turning on the engines and checking the fluids of their car and doing other basic diagnostics evaluating the status of a vehicle before going on a long trip. While unusual for most other companies, it spe

      • Lloyds of London. They'll insure virtually anything, even someones breasts. (They've done it.)
    • by jeti ( 105266 ) on Tuesday September 06, 2016 @02:36AM (#52832953)
      AFAIK the launch was insured. This does not include the static fire test.

      A lot of satellites are not insured. Buying insurance means that you pay money to reduce financial risk. On average, you pay more than you would without insurance. That's how insurances make money. If you can afford the risk, you'll probably not want to pay for insurance.
    • Launching doubly so. OK this was a ground test of the engines. We still don't know what caused the explosion.

      And hey, wasn't the satellite INSURED??

      Why was it even attached during the test of the engines?

      • by Richard_at_work ( 517087 ) on Tuesday September 06, 2016 @03:58AM (#52833145)

        Because integration of the payload onto the stack takes days to carry out and test - you simply cant do a test and then reintegrate the payload because that means much more time between the test and launch, which means the test is basically invalidated.

        I'm not sure if the stack remains vertical after the test, but I would think that raising and lowering the stack to and from a vertical position introduces brand new variables all of its own (moving debris around internally etc).

      • Because the actual launch is typically just a couple of days after the static test firing. It is a complete system check prior to launch.

      • by XXongo ( 3986865 )

        Why was it even attached during the test of the engines?

        Because they didn't expect this to be anything other than routine. If they knew it was going to blow up, they wouldn't have had the satellite on the vehicle.

        This was the full-up test, verifying everything was ready to go.

      • by Alioth ( 221270 )

        Because it's a test of the whole stack from what I understand. There may (for example) be a destructive resonance that could destroy the rocket in flight which could be detected during an engine test, which only occurs when the payload is installed. You obviously want to find this out now when you can abort a test and find out what's causing the resonance, rather than when the rocket blows up ten seconds after launch.

    • Risky? We have been launching satellites into LEO with chemical rockets for over 50 years. Why is it still risky? If you ask the Space Nutters, things like going to Mars is doable. According to them, interstellar travel is possible with todays technologies. We just need to mine asteroids and build a lunch platform in orbit and convert space dust to fuel. These SpaceX guys must not be doing it right. Did they not read the Space Nutters blogs???
      • Risky doesn't mean impossible.

        We can go to Mars if we want to throw enough money at it. Living there in a self-sustaining colony of healthy human beings is probably awaiting several engineering and medical breakthroughs, though.

        If you're willing to risk a roughly 99% chance of dying in flight due to environmental failure, we could manage an interstellar generation ship - again, by throwing enough money at it.

    • I find it incredible that Facebook didn't think of something like that. Calculating the risk of a launch failure is baked into every satellite revenue projection, leading to a decision to either buy insurance or self-insure.

    • by Kinwolf ( 945345 )
      Even if insured, insurance doesn't cover lost revenue and delays in the service that would have been offered. That's the real hit to spacecom as building a satellite like this takes 2 years minimum.
    • Definitely risky. That's why all the launch agreements have some kind of sh## happens clause in case it blows up or whatever. That's also why people insure their asset launches. Sounds like that company wants to ignore it's contracts and double dip, unless of course it was too stupid to buy the insurance in the first place.
      (Obviously I haven't seen the actual contract, but as those clauses are standard for everybody else in the space industry, I see no reason why SpaceX wouldn't have them as well, they aren
  • by Strider- ( 39683 ) on Tuesday September 06, 2016 @02:32AM (#52832945)

    What's with these summaries? Facebook had nothing to do with the spacecraft, other than the fact that they had an agreement in place to lease a significant portion of the Ka-Band transponders on the satellite.

    • Because "Facebook" is clickbait for the /. set.

  • Would the like a ride on a reused one? :-)
  • If they did not pay for insurance, then they are morons. I guarantee the launch contract states, "this may blow up, we are not responsible"

    • by nadaou ( 535365 )

      They had insurance, two forms actually.

      Transport insurance is relatively cheap, ~0.6% of the $200M.
      Launch insurance is much more, about 6% of the cost.

      Since this was pre-launch it is covered by the transport insurance and the transport insurance writer is having a very bad day.

      What the Israeli company is really upset about is that their acquisition (aka massive payday for their execs) by a large Chinese company was contingent on a successful launch, and has now fallen through. This has caused their stock pr

      • Then they were stupid as fuck to allow that contingency clause for a series of actions (the launch contractor phases) that Spacecom itself had NO control over and didn't actually do itself.

        Their job was to build the bird and deliver it. They did that. Hopefully Facebook paid their sorry butts for it. So the next set of steps was on SpaceX and it blew up. OK, well it's probably not Spacecom's fault.. Nobody knows. But probably not their fault.

        Now they are saying the buyer they had no longer wants to bu

  • Latest news : SpaceX accept to give a free flight as compensation and will offer it in the form of enough frequent flyers miles. Small prints mentions that those miles will expire 6 months after being allocated.
  • Presumably Facebook contracted with this company to supply the satellite. They did that. They should have gotten paid.

    If you or I go buy a new car, we pay for it, and wreck it on the way home, the car dealer is not going to be out. We agreed to pay. Likewise Facebook surely agreed to pay for the damn thing. So what are they whining about?

    The failure on the pad probably wasn't their fault so even if there was some kind of contingency, they should still get paid. They delivered the vehicle to the

    • by kriston ( 7886 )

      No. Facebook was to lease part of the payload. Facebook has nothing to do with the satellite otherwise.

  • What kind of journalism is this? The satellite did not "belong to Facebook." The company was merely leasing part of the payload.

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