Spaceflight Insider

Spacecom to claim compensation from IAI, SpaceX for Amos-6 loss

SpaceX Falcon 9 rocket at Cape Canaveral Air Force Station Space Launch Complex 40 Amos 6 Photo Credit: Carleton Bailie / SpaceFlight Insider

Black smoke billows in the aftermath of the Sept. 1 launch pad explosion at Cape Canaveral Air Force Station’s Space Launch Complex 40 that destroyed both SpaceX’s Falcon 9 rocket and Spacecom’s Amos-6 satellite. Photo Credit: Carleton Bailie / SpaceFlight Insider

Space Communications (Spacecom), owner of the Amos-6 satellite that was destroyed in the Sept. 1 pad explosion along with SpaceX’s Falcon 9 rocket tasked with lofting it into orbit, is preparing to claim compensation from the satellite’s manufacturer, Israel Aerospace Industries (IAI), as well as SpaceX.

Jerusalem Online reported Spacecom will demand $205 million from IAI and $50 million from SpaceX.

They also mentioned the company’s equity decreased by $30 million due to the accident. In the days following the explosion, Spacecom’s stock, which trades in the Tel Aviv Stock Exchange under SCC, fell by more than 40 percent.

Spacecom Amos-6 satellite during final tests Spacecom photo posted on SpaceFlight Insider

The Amos-6 satellite undergoing tests. Photo Credit: Spacecom

In statement released Sept. 4 to the exchange, Spacecom said because the failure occurred prior to a launch, their satellite was not covered under any launch insurance. According to Globes, what premium they had purchased will be returned to the company.

Additionally, Reuters reported under an agreement with Spacecom said it was entitled to a full refund from IAI for the cost of construction of the satellite with interest of Libor plus 4 percent on each payment the company made to IAI.

Spacecom will use part of that money to repay the state of Israel $17 million. Additionally, the rest received will be used to pay back a series of bonds of which “bondholders now have cause to demand repayment,” according to Globes.

The Globes report mentions Spacecom is due to receive $50 million in compensation from SpaceX, but it can also choose instead to use another Falcon 9 rocket without payment.

On top of that, Space News reported just over a week before the explosion that a Chinese group, Beijing Xinwei Technology Group, was planning on purchasing the satellite company. The Israeli company’s shareholders agreed Aug. 24 to sell the company for $285 million in cash.

However, this purchase was dependent on a successful launch and the entry into service of Amos-6, which was supposed to be sent into orbit Sept. 3.

Now the two companies, according to Globes, are “examining adjustment of the agreement between them in the light of the failure with the Amos 6 satellite.”

Amos-6 was expected to be positioned in the 4 degrees West orbital position in geostationary orbit. It would have replaced the aging Amos-2 spacecraft to serve parts of Africa, the Middle East, Europe, and the United Kingdom.

spacecom shares

Spacecom share price on the day of the explosion. Image Credit: Tel Aviv Stock Exchange

Globes reported IAI had purchased also insurance for the satellite and is due to receive compensation, which it will then transfer to Spacecom – an expected total of $173 million.

Facebook with Eutelsat also had a business deal with Spacecom. Together, they were expected to pay $95 million over five years to lease Ka-band capacity on Amos-6. This would have provided coverage in Sub-Saharan Africa for Facebook’s

But with the loss of the satellite, according to Spacecom, the business deal with Facebook will be nullified.

Space News has reported shares in other satellite companies, in addition to Spacecom, have also fallen. In particular, Iridium, which was next in line for launch with SpaceX, saw its shares fall by 5 percent in the minutes after the accident.

Iridium shares trade on the Nasdaq Stock Market.

SpaceX is still in the early phases of an investigation on why the explosion occurred. According to an update on their website, the company is currently examining a time period of just 35-55 milliseconds.

The NewSpace firm also confirmed the launch pad, Space Launch Complex 40 at Cape Canaveral Air Force Station, incurred damage, but they have not determined the scope. The company noted their other two launch pads (one in California and the other at Kennedy Space Center in Forida) are capable of launching both Falcon 9 and Falcon Heavy rockets. SpaceX said they are confident those two pads can support their return to flight and upcoming launch manifest.

Space Launch Complex 4E at Vandenberg Air Force Base in California is currently in the final stages of an operational upgrade while Launch Complex 39A at Kennedy Space Center is expected to be operational by November on the company’s current schedule.


Derek Richardson is a student studying mass media with an emphasis in contemporary journalism at Washburn University in Topeka, Kansas. He is currently the managing editor of the student run newspaper, the Washburn Review. He also writes a blog, called Orbital Velocity, about the space station. His passion for space ignited when he watched space shuttle Discovery leap to space on Oct. 29, 1998. He saw his first in-person launch on July 8, 2011 when the space shuttle launched for the final time. Today, this fervor has accelerated toward orbit and shows no signs of slowing down. After dabbling in math and engineering courses in college, he soon realized that his true calling was communicating to others about space exploration and spreading that passion.

Reader Comments

They took a risk with a cheap launch provider. Let this be a lesson, cheaper is not always better. Sometimes spending extra for the experience goes a long ways.

Ariane 5 and Atlas V are much more expensive and have long waiting queues, whereas Proton has similar success rate to Falcon 9.

Atlas V would be too expensive for Facebook’s free Internet program, almost double of that Falcon 9. Ariane V on the other side, the queue is so long that it took years before it launched (average of 4 years). So the option would be Proton and Falcon 9. Long March is not an option due limitations of can’t use western components

IAI? Why them? They’re not an insurer, they weren’t responsible for launch, it makes absolutely no sense for them to be financially liable for this disaster.

Horse first, then cart. Jumping to a conclusion before an investigation in completed is pointless. There is no indication, as some have suggested, that this explosion resulted from a “cheap launch.” There is no launch provider with a spotless record. It is regrettable that there was no insurance coverage prior to launch, perhaps those seeking launches will see to that in the future.

IAI apparently did insure the satellite, so that’s why they’re paying Spacecom. With their insurance payout. AFAIK this is pretty standard with satellites – builder insures payload until launch, then it’s the buyer’s responsibility.

Now some speculation based on nothing but reading too many John le Carré novels – who might gain from this disaster? Not SpaceX that’s for sure, not IAI either. Not Spacecom as the price for the sale of the company was dependent on the satellite going into service.

But the Chinese company Xinwei Technology Group, who were paying $285M (in cash) for Spacecom? Now they may renegotiate the sale and may get it substantially cheaper. Or they may not buy it at all. Did they really have access to $285M cash to pay for Spacecom?

Another possibility – what about the Israeli govt? Unhappy about having one of their satellite companies owned by Chinese? Security implications? But why not just block the sale if that was a problem for them?

It might be worth having a close look at XTG’s finances, if that’s even possible of course.

the Falcon 9 is a too young rocket to safely launch astronauts

How young was the Atlas before we put a man on top? How young was the Saturn V when we launched astronauts to the moon?

According to SpaceX, a Crew Dragon atop that rocket would have had enough time to escape the fire.

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