LOGAN, Utah — OneWeb asked a U.S. District Court to dismiss launch-service provider Virgin Orbit’s lawsuit demanding $46.5 million in termination damages, saying Virgin’s complaint omits agreements between the two companies that would collapse Virgin’s case.
Virgin Orbit in June sued OneWeb for nonpayment of what Virgin said were damages flowing from OneWeb’s termination of a contract for 35 launches of Virgin’s LauncherOne rocket.
A separate agreement for four initial launches was left untouched, and OneWeb apparently still plans to use LauncherOne for these missions despite the fact that the vehicle has yet to fly and that its prices, at $6 million per launch, are now considered high: http://bit.ly/2WZteVv
The original contract was signed in May 2015. OneWeb cancelled the 35-launch piece, called “Remaining Firm Launches,” in June 2018. Virgin said the cancellation, made without cause, would deny it between $234 million and $834 million in revenue.
OneWeb asked to be given two months, to Aug. 5, to respond to the complaint, made in the U.S. District Court for the Southern District of New York.
The core of the OneWeb response is a request that the court read the full launch-service contract from 2015 and, importantly, the contract’s modification of July 2017, and related communications between the two companies.
OneWeb, in its filing with the court, said the 2017 contract amendment was designed “to keep the termination liability from increasing while the parties attempted to negotiate amendments to the LSA [launch service agreement],” OneWeb said.
It said the modification, endorsed by both parties, “materially altered the payment that would be due to Virgin if OneWeb terminated the launches without cause.”
As portrayed by Virgin, the original contract is extraordinarily generous to Virgin given the fact that the company had not demonstrated its service and was already on the high side of the commercial launch market.
OneWeb: Virgin orbit is 2-3 times the prevailing market rate
OneWeb said that now, Virgin’s $6 million price per launch — of a single 150-kilogram OneWeb satellite to a 1,200-kilometer orbit — “is two to three times the market price.”
OneWeb said the original contract allowed it to cancel the deal without cause, and that the termination fee it would owe Virgin would be reduced by whatever advance payments OneWeb had already made.
OneWeb said it agreed that its termination triggered a $70-million fee, as Virgin alleged, but that this amount should be reduced by the amount of previous payments.
Because it rejected the amount of the fee, OneWeb declined to pay the Virgin bill.
To date, Virgin has received $66 million from OneWeb, of which $18 million was paid “in respect to launches that will still go forward,” OneWeb said. “That is, Virgin has received more than $48 million for future launch services that Virgin will no longer need to provide.”
For OneWeb, the termination fee should be reduced by $19 million in previous payments.
OneWeb did not say that Virgin’s delayed entry into service would have the effect of terminating the contract, but did note that Virgin “would not have been able to perform on the original schedule set forth in the LSA.”
OneWes launched its first six satellites in February aboard a Europeanized Russian Soyuz rocket.
That rocket will be used to launch the vast majority of OneWeb’s 650-satellite constellation starting late this year, with 34-36 satellites carried on each flight. Most of these launches will be from Russian spaceports. The contract was negotiated with Europe’s Arianespace launch provider.
OneWeb on Aug. 7 said it had passed a key regulatory milestone, called “bringing into use,” at the International Telecommunication Union, by operating in its assigned Ku- and Ka-band frequencies, from its assigned orbit, for 90 days. OneWeb is registered in the United Kingdom, through Britain’s Ofcom agency.