by Douglas Messier
When the contract was announced in June 2015, it seemed like a blockbuster deal: satellite Internet provider OneWeb had placed an order for 39 launches with options for 100 more for Virgin Galactic’s (now Virgin Orbit’s) LauncherOne.
What made the order extraordinary was not just the large number of launches, but the fact that the rocket really didn’t even exist yet. (The fact that Richard Branson’s Virgin Group was an investor in OneWeb probably helped.)
Four years later, the blockbuster deal is a bust. According to a lawsuit filed this week by Virgin Orbit, OneWeb last year canceled 35 of the 39 planned launches., slicing most of the value from the $234 million deal.
SpaceNews reports that Virgin Orbit orbit is suing for $46.32 million it claims OneWeb owes it from a $70 million contract termination fee.
According to Virgin Orbit’s 14-page complaint, Virgin and OneWeb entered into a launch services agreement May 20, 2015, that called for four “initial firm launches” to start in 2017 and 35 “remaining firm launches” to start in 2018. The contract included options for an additional 100 launches at an agreed upon $6 million per launch, meaning Virgin Orbit stood to earn between $234 million and $834 million under its agreement with OneWeb.
Virgin Orbit says OneWeb sought during the spring of 2017 to reduce the number of launches, pay less per launch, “and spread out the launch dates for several years beyond the original terms.” OneWeb, according to Virgin’s complaint, also balked at escalating termination fees built into the contract, saying its lenders objected to incurring the increased obligation. Virgin Orbit at first agreed to slow the rate of escalation and then agreed to freeze it at a flat $70 million through June 15, 2018, while negotiations over a revised contract continued.
On June 7, 2018, after months of negotiations, Virgin Orbit sent OneWeb a new written proposal. On June 14, 2018 — the day before the contract termination fees were set to resume their rise — OneWeb canceled the 35 “remaining firm launches” but left intact the agreement covering the four initial launches, according to the complaint.
LauncherOne was to have orbited one or two OneWeb satellites per flight. Although four launches were to have taken place in 2017, Virgin Orbit has yet to conduct a flight. An initial test launch is set for later this year.
OneWeb is also running behind. The company launched the first six of a planned 648 satellites in February aboard a Soyuz booster launched from French Guiana. Plans are to launch up to 35 spacecraft at a time aboard Soyuz vehicles.
Under the $234 million contract with Virgin Galactic, the 39 launches would have cost $6 million apiece. That is a very low price per flight. It’s not clear whether Virgin Orbit could make a profit at that price point.
LauncherOne was in development when the agreement with OneWeb was announced in June 2015. At that time, it was scheduled to be air launched from a WhiteKnightTwo carrier plane, which is also used to launch Virgin Galactic’s SpaceShipTwo suborbital space tourism vehicle.
In December 2015, Virgin Galactic announced that it would be building a larger LauncherOne that would be too heavy to be launched from WhiteKnightTwo. Instead, a modified Boeing 747 jetliner named Cosmic Girl formerly operated by Virgin Atlantic would launch the larger booster.
Cosmic Girl has been flying captive carry flights with LauncherOne out of the Mojave Air and Space Port. A drop test of the booster is planned at Edwards Air Force Base followed by the first test launch.