By Andrea Shalal-Esa
WASHINGTON (Reuters) - Boeing Co on Tuesday announced a four-satellite contract for a new "small platform" version of its 702 satellite that will be powered solely by electric motors - a technology breakthrough that Boeing said would help reduce costs in the highly competitive satellite market.
Boeing said it invested a "sizeable" amount over the past two years to develop the new 702SP satellites - a sign of the growing importance of commercial sales to the company and the dearth of new U.S. government satellite development programs.
Craig Cooning, vice president and general manager of Boeing Space and Intelligence Systems, told Reuters in a telephone interview on Monday that commercial sales accounted for about 25 percent of his sector's revenues in 2011, up sharply from 10 percent in 2009 and 2010.
Boeing does not provide a sector by sector breakdown for its revenues or earnings. The company declined on Tuesday to give the amount of its investment in the new satellites or the value of the contract.
Cooning said commercial would continue to account for 20 percent or more of revenues for some time, given the current tightening of defense budgets and lack of new program starts, as well as continued demand for commercial satellites.
He said Boeing was currently bidding for some $1.5 billion in commercial orders, but was also working closely with the Air Force to reduce costs on its government satellite programs and adopt more commercial-style contracts.
For instance, moving to firm, fixed-price contracts on the Boeing-built Wideband Global Satellite system had shaved $50 million to $60 million off the cost of each of those satellites, he said, bringing the cost to about $350 million per satellite.
At the same time, Boeing was investing its own money to improve its production line and develop new capabilities that would maintain the industrial base even in the absence of new government-funded development programs, Cooning said.
Boeing said the new contract, a joint procurement by Asia Broadcast Satellite (ABS) and Satélites Mexicanos (Satmex), will give each of the two regional operators two of the new satellites, with the first pair to be delivered in late 2014 or early 2015.
The new satellites can be launched two at a time on all major launch vehicles, including the Falcon 9 developed by Space X, Boeing said.
Steve O'Neill, president of Boeing Satellite Systems International, told a news conference on Tuesday that the ability to launch two satellites at once would essentially halve launch costs for the new satellites.
Use of all-electric propulsion would also make them lighter since they would not need to carry liquid rocket fuel, he said. It would take about four to six months for those satellites to get to orbit, he said.
O'Neill told Reuters after the news conference that Boeing was already looking at additional customers for the new satellites, but gave no details.
Joseph Rickers, president of Lockheed Martin Commercial Space Systems, told a panel at the Satellite 2012 conference that his company had also developed electric propulsion satellites for its U.S. government customers, but had not yet found the "sweet spot" to introduce them for commercial buyers.
Jim Simpson, vice president of business development for Boeing Space & Intelligence Systems, told reporters that Boeing was standardizing components to reduce production costs, and hoped to use the new satellite development as "an incubator" for all its satellite programs, including government spacecraft.
He said selling four satellites at a time allowed Boeing and its suppliers to tap into economies of scale and reduce the costs of producing the satellites.
(Reporting by Andrea Shalal-Esa; Editing by Gary Hill)