The Strategist

Elon Musk will pay $ 50 million for explosion of Falcon 9

09/06/2016 - 15:57

Israeli company Space Communication Ltd, an owner of telecommunications satellite AMOS-6 destroyed because of an explosion of launch vehicle Falcon 9, may require compensation of $ 50 million, or a free rocket launch from American aerospace company SpaceX.

Space Communication can also exact $ 205 million from Israeli corporation Aerospace Industries, which designed and built Amos-6. SpaceX officials declined to comment, saying it does not disclose terms of agreements or insurance contracts.

Amos-6 communications satellite was to be launched into space with help of carrier rocket Falcon 9 on Saturday. However, the rocket and its cargo were destroyed during an accident occurred in preparation for the fire test engines.

Amos-6, according to the company, was the largest and most advanced ever built by Israel Aerospace Industries. Head of Israeli Space Agency Isaac Ben-Israel said that construction of a replacement to Amos 6 will take up to three years. News of the explosion in Florida dragged the company's shares down by almost 9% on Thursday on the Stock Exchange of Tel Aviv. On Sunday, the share price fell by 34%.

Amos-6 costs around $ 200 million, noted Spaceflight Now. The satellite was designed for transmission of television and Internet signal to the Middle East, Europe and Africa. Facebook also planned to use Amos-6 within its project to provide access to the Internet in a number of African countries.

Facebook and satellite operator Eutelsat agreed to pay $ 95 million over five years for lease of the machine. Eutelsat has estimated its losses from the explosion at € 50 million.

Cargo rocket Falcon 9, owned by Elon Musk’s Space X, exploded on a launch pad at a spaceport at Cape Canaveral. This is the second serious incident with Falcon 9. In June last year, the missile exploded on 139th second of flight due to faulty fuel system.

Space is huge, and so are sums invested in the space industry. Revenues from satellite services in the past year totaled $ 127.4 billion, according to report of Tauri Group. The launch business, on the other hand, is relatively small. Its revenue totaled $ 5.4 billion last year.

The main rival of SpaceX is Arianespace, a French multinational company. Beides, there are others, in particular, International Launch Services, a US-Russian joint venture, which provides launch of rockets Proton (by Russian development) from Kazakhstan. Arianespace, with excellent safety profile, is much more expensive than SpaceX. Safety and performance of Proton rockets are significantly behind of Falcon 9. Industry analysts say that if SpaceX postpones a launch for a few months, its clients would probably wait. However, if the delay becomes longer, the customers would turn to other companies.

SpaceX is certainly going to face difficulties because of delays since the company will have to restore its intensive schedule of launches. Yet, it does not imply financial difficulties. The company said its business "is reliable, there are 70 missions for more than $ 10 billion in on our list now." The company said it is still too early to predict time of resumption of launches. Apart from the damaged launch pad, SpaceX has two others under construction. One of them is located in Florida and is expected to be ready by November. Other is based at Vandenberg Air Force Base in California. SpaceX said that it is on "final stages of commissioning".