Amos 6 blast creates opportunities for IAI - report

Amos-6 satellite, photo: PR

"Defense News": With Spacecom's sale in question, IAI may have greater chances of winning replacement orders.

Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) might profit from the loss of the Amos-6 satellite in a blast on Space-X's launch pad in Cape Canaveral, Florida last week. A "Defense News" article published today claims that the accident, while being a strategic setback, might also open new opportunities for the Israeli space industry.

The planned sale of Spacecom, which was to operate Amos-6, to the Chinese conglomerate Xinwei threatened IAI's chances to receive follow-on orders for future Amos-series satellites. Now that the sale has been put in question after the Florida explosion, the situation has changed.

On August 24, in a notice to its principal shareholders, Spacecom said that Xinwei Technology Group had agreed to buy the company for $285 million in cash. The firm noted that the sale was contingent upon the successful launch of the Amos-6 into orbit. Now, with the planned deal clouded by uncertainty, Israeli industry executives and experts say IAI may have greater chances of snagging an Amos-6 replacement order as well as follow-on Amos-series communications satellite contracts. "Defense News" says that these contracts would have probably gone to non-Israeli firms once Spacecom was sold to the Chinese.

Of course, IAI still has a long way to go to land these lucrative contracts. Defense industry executives told "Defense News" that Spacecom has been in communication with US firms Boeing and Loral for prices and data on the potential production of Amos-7 and Amos-8 satellites.

In an interview several months ago, IAI CEO Yossi Weiss acknowledged that IAI will have to fight hard to keep Spacecom from going abroad to produce follow-on Amos satellites, just as the firm had to fight to clinch the Amos-6 deal.

Tal Inbar, head of space programs at Israels Fisher Institute for Air and Space Strategic Studies told "Defense News, Its a crisis and opportunity at the same time; it all depends on the strength and financial resources of Spacecom. Inbar said that if Spacecom's sale deal to the Chinese had gone ahead, chances were slim that the Amos-7 order would be awarded to IAI. Now, he said, it could be a different story.

If, after Spacecom gets the insurance money, they embark on an emergency buildup for a new satellite and if and its a big if the next satellite will be ordered from IAI, this could assure continued business for the state of Israels Comsat sector, Inbar said.

He added that the big question is what will be Spacecoms future plans. If they want to replace Amos-6 very quickly, they may opt to buy an existing satellite that is already in space.

Neither Spacecom nor IAI would comment specifically on how, if at all, the loss of Amos-6 on Thursdays would impact on the planned sale of Spaceom to Xinwei or the future of its future satellites.

In a September 1 announcement, IAI said, Were saddened by the loss of the satellite and stand ready to serve Spacecom. The sector of communications satellites is strategic for IAI and for the state of Israel and we hope that the state will continue to act for the good of preserving the [communications satellite production] knowledge, accumulated in Israel, that will allow continued production of communications satellites in Israel.

Published by Globes [online], Israel business news - - on September 4, 2016

Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Amos-6 satellite, photo: PR
Amos-6 satellite, photo: PR
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