Hughes Sues Lockheed Over Their Satellite Launch Pact
Hughes Space & Communications Inc., the world’s largest manufacturer of commercial satellites, sued Lockheed Martin Corp. for more than half a billion dollars, claiming that the aerospace giant reneged on a contract to launch satellites through a joint venture with Russian companies.
The suit, filed Monday in Los Angeles County Superior Court, accuses Lockheed-Khrunichev-Energia International of refusing to launch Hughes satellites at a price agreed to in a 1994 contract. Bethesda, Md.-based Lockheed Martin has a 51% stake in the venture.
In its suit, Los Angeles-based Hughes accused LKEI of exploiting “a severe shortage of rocket launch capacity” and “selling these low-cost launches at prices that are tens of millions of dollars more per launch” than the prices agreed to in 1994.
Hughes seeks a total of at least $550 million plus punitive damages.
Hughes executives declined to elaborate on the lawsuit Tuesday, and a Lockheed Martin spokesman said his company was not ready to comment on it.
“We’re still reviewing the suit and will have more to say at an appropriate time,” Lockheed Martin spokesman Charles P. Manor III said.
Hughes said it agreed to buy at least four launches from LKEI out of concern that demand for commercial satellite launches would outpace supply, a prediction that has come to pass. Because the two Russian partners--Khrunichev State Research & Production Space Center and Energia Scientific Production--did not have a reliable record, Hughes got Lockheed to guarantee the terms of the contract.
Hughes agreed to buy four launches with Russian-made Proton rockets between 1997 and 2000, plus additional launches if LKEI’s schedule permitted, all at fixed prices. But when Hughes asked for more slots, LKEI “demanded prices far greater than the fixed prices Hughes had bargained for . . . and at terms substantially less favorable,” according to the suit. LKEI said the higher prices were necessary to pay for an upgrade of the launch facility, the suit says.
LKEI has garnered more than $600 million in orders. Other customers include Loral Corp. and SES, a TV services provider in France.
