XM Satellite Radio has ordered a fourth satellite from Boeing, but may have to raise extra funds to pay for the craft after insurers rejected its $400 million claim against the reduced operational life of the two Boeing-built satellites now in orbit.

Solar-array flaws mean the two high-power satellites, launched in 2001, are expected to operate until 2008, short of their 15-year design lives. This means XM will have to spend $320 million on launching its third, spare, satellite and ordering a fourth earlier than planned.

The spare satellite,XM-3, will be launched late next year and the newly ordered XM-4 in 2006. Both are Boeing 702-series satellites, like the first two, but with improved solar arrays. They will be placed in orbit by Boeing-led Sea Launch. While XM-3 will be launched under XM's delivery-in-orbit contract with manufacturer Boeing Satellite Systems, the XM-4 launch contract is a direct agreement with Sea Launch.

Washington DC-based XM has raised $190 million to cover the launch of XM-3, but says it does not have the $130 million required to buy the fourth satellite unless its insurance claim is settled or alternative financing arranged. XM says the insurers rejected the claim because the satellites are performing above their insured level. The company disagrees and is prepared to pursue arbitration or litigation to cover its loss. Insurers facing $1.6 billion in claims on six 702 satellites affected by solar-array flaws have so far paid out only to Thuraya Satellite Telecommunications.

PanAmSat has filed a $169 million insurance claim for Galaxy IVR, a Boeing 601HP spacecraft launched in 2000, saying unexpected shutdowns in the secondary electric-propulsion system will reduce its useful life. Mexican satellite operator Satmex has sued Boeing for uninsured losses on the 601-series spacecraft Solidaridad 1, which failed in 2000 due to a spacecraft control processor flaw.

Source: Flight International