Hughes Would Share Gains of Satellite Rescue

If an effort to salvage a Hughes satellite is successful next month, the revenue from the satellite’s operation will be shared between Hughes and the underwriters that insured it for $85 million, a spokesperson for Hughes Communications said Monday.

The agreement between the El Segundo firm and a consortium of European and American insurance companies paved the way for an attempt to make “on orbit” repairs of the satellite, called Leasat 3, during the flight of the space shuttle Discovery in late August.

The satellite was to provide communications for the Navy under a lease agreement with Hughes, but technically it is now owned by the insurance companies.

The rescue attempt will involve two “space-walking” astronauts who will rewire the mechanism that failed to activate the satellite when it was released from the shuttle earlier this year. The National Aeronautics and Space Administration had said earlier that Hughes would pay the cost of the attempted rescue, estimated at about $10 million.

In announcing the agreement, a Hughes official said a successful rescue “could substantially reduce the underwriters’ loss,” possibly curbing runaway insurance rates for satellite launches.

However, the chances of success were termed “uncertain” because the satellite has been subjected to extreme temperature fluctuations during its long period of dormancy, possibly damaging onboard systems and fuel lines. About 55% of the $85-million loss was covered by London underwriters and the rest by American firms.