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Mon, Feb 19, 2007

Boeing Faces New Claims Against Satellite Systems Unit

"Claims Without Merit"

You're big. You're successful. You're open to lawsuits.

Boeing's potential financial exposure from allegedly building defective commercial satellites continues to climb, The Wall Street Journal reported Saturday, with reports of two new negligence and breach-of-contract claims totaling $610 million against the company.

These two latest actions were disclosed in a filing with the Securities and Exchange Commission Friday, demonstrating that insurance companies are willing to join satellite operators to pursue arbitration claims against Boeing, reported Xinhua.

In the filing, Boeing said all the claims lack merit and it intends to fight them.

Telesat Canada, the satellite unit of Canadian telecommunications company BCE Inc., filed an arbitration order against Boeing in November 2006 and an action in a Canadian superior court in December 2006.

Several early model 702 satellites, including Telesat's Anik F1, allegedly faltered in orbit in 2004 after having problems with their solar panel cells.

Telesat contends breach of contract and negligence. Telesat and its insurers are seeking more than $385 million in damages and $10 million in lost profits. Boeing pronounced the claim without merit.

Insurers for Japanese firm Space Communications Corp. brought a second suit against Boeing's satellite unit, seeking $215 million related to a failed 2004 launch of Japan's Superbird-6 satellite, according to the SEC filing. Space Communications' insurers filed an arbitration request on Dec. 1, 2006.

The Superbird-6 was allegedly damaged in low orbit after the launch. Boeing claimed the satellite was launched into lower-than-intended orbit and needed to expend additional fuel to get into the correct orbit.

Boeing also said that claim was without merit.

Overall, industry officials have said Boeing could face significantly more than $1.5 billion dollars in damage claims resulting from various satellite defects, according to the Wall Street Journal. 

Separately on Friday, Boeing announced it will begin selling a less-powerful, less-expensive version of its biggest satellite model this year for customers who require lower signal strength.

The new 702B spacecraft will deliver 2 to 18 kilowatts of signal strength and likely carry a smaller price tag than the 702, Boeing's most powerful model, which delivers 10 to 16 kilowatts, spokeswoman Diana Ball said Friday.

FMI: www.boeing.com, www.telesat.ca, www.superbird.co.jp/english

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