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Will SpaceX lose more customers after September rocket explosion?

With billions in contracts with commercial satellite companies and NASA on the line, SpaceX is facing delays in getting its rockets back into space. The delays have cost the company one major contract this week. 

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A SpaceX Falcon rocket booster lands on a platform in the Atlantic Ocean after launching a satellite into orbit.

SpaceX via AP/File

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Following a September explosion that incinerated SpaceX’s Falcon 9 rocket and a $200 million communications satellite aboard, the private aerospace company optimistically hoped to investigate and resume flights by the end of the year. But now, SpaceX says, it is pushing back commercial flights to January.

“This allows for additional time to close-out vehicle preparations and complete extended testing to help ensure the highest possible level of mission assurance prior to launch,” wrote the company in an online update Tuesday, referencing the potential January launch of an initial 10 of 72 satellites for its customer, telecommunications company Iridium Communications. SpaceX’s satellite launch contract with Iridium, worth $492 million, was the largest commercial space deal ever at the time of signing in 2010, according to Space.com.

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The recent explosion at Cape Canaveral Air Force Station in Florida has financial implications way beyond SpaceX, which already has been criticized for sacrificing quality in moving too fast to advance its rocket technologies.

"For SpaceX, which has consistently pushed the envelope of rocket development (3D printed engines, reusable rockets, densified propellants, etc.) and achieved rapid success, this latest failure is yet another reminder that 'rockets are tricky' and quality control is paramount when playing with explosives," wrote technology and satellite industry analyst Chris Quilty in SpaceNews in September.

SpaceX's launch delays have for now thwarted Facebook’s plan to connect large swaths of sub-Saharan Africa to the internet through the Amos-6 satellite, which was lost during the explosion aboard the Falcon 9 as the rocket was undergoing routine testing days before launch. Amos-6 was built by Israel Aerospace Industries, an Israeli government-owned defense and aerospace company, for Israeli communications satellite operator Space Communication, or Spacecom.

The incident also jeopardized a pending deal by Beijing Xinwei Technology Group, a Chinese telecommunications company, to acquire Spacecom, whose shares fell in value immediately after the explosion. And it delays nine other commercial satellite deliveries SpaceX was on the hook to launch for customers by the end of this year, as Mr. Quilty reported in SpaceNews. Additionally, a November supply delivery to the International Space Station (ISS) under a contract SpaceX signed with NASA also had to be scrapped. (There are other companies and international space agencies that can deliver supplies to the ISS.)

Founded and headed by Elon Musk, who is also a founder and CEO of electric car company Tesla Motors, which also has been criticized for moving too fast, SpaceX’s delays already caused it today to lose one launch order to French competitor Arianespace, as the Wall Street Journal reports.

While the company could lose more customers in the long term, including NASA, if its reliability continues to be challenged, it’s unlikely that customers will stop doing business with SpaceX for now, says Matthew Bey, energy, science and technology analyst at Stratfor, a global research firm and think tank.

For one, it’s not easy for satellite operators to swap satellite-ferrying companies, so they mostly have to live with the delays.

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“It’s very hard to organize a competitor in a matter of just months or a couple of weeks, so if all SpaceX clients wanted to do that, there simply in the next six months wouldn’t be that many spare rockets in production, or that many launch schedules in production, to do that quickly or easily,” says Mr. Bey.

Analysts point out that more incidents could batter SpaceX’s reputation further and erode customer trust. September’s explosion came just one year after another Falcon 9 rocket bound for the ISS exploded seconds after launch from Cape Canaveral. These incidents have fueled ongoing concerns about the company’s reliability.

In general, those in the space business want to see the company succeed because it’s at the forefront of developing reusable rockets, a top priority for commercial spaceflight companies trying to lower costs.

“I think there's an acceptance that SpaceX brought significant changes to the industry and that at some point SpaceX will probably succeed, but the question is when?” says Bey.

For now, the company is working with the Federal Aviation Administration (FAA), NASA, and the US Air Force to finalize the investigation of the September explosion. The cause has been attributed to an ongoing problem with the SpaceX’s cryogenic propellant, or liquid oxygen mixed with a type of kerosene and nearly frozen to make the fuel more dense, and thus compact. This technique aims to give the rocket more power to carry heavier loads, and makes room for more fuel to ensure that the rocket can return to Earth.

SpaceX was supposed to start shuttling astronauts to the ISS next year, but that has been put on hold. Boeing is also expected to begin ferrying astronauts to the space station in the next couple of years.

[Editor's note: This story has been updated to clarify which company built and owned the Amos-6 satellite.]


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