New Thesis Regarding The SpaceX Explosion Impacts Iridium

| About: Iridium Communications (IRDM)

Summary

The September 1 SpaceX explosion already led to a delay in Iridium NEXT launches.

These launches are now arguably in an impossible schedule.

Still, there are further consequences that the market isn't taking into account, springing from a new thesis regarding the SpaceX explosion.

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Source: USLaunchReport.com

Here's the thing, Iridium (NASDAQ:IRDM) is entirely dependent on SpaceX quickly resuming its flights after its September 1 disaster. Iridium needs this to happen to have any chance of putting up its Iridium NEXT constellation before it has to decommission its existing constellation (or it fails of its own accord). Indeed, even if SpaceX resumes its launches by December, it already seems impossible for the new constellation to be up before the old one starts coming down.

In this context, anything bringing about a delay to SpaceX launches, or making it hard to proceed with Iridium launches, is a problem. Obviously, the September 1 SpaceX explosion already had an impact on the Iridium launch schedule. However, what I am going to write about here is in addition to such an impact.

You see, it's already been established what happened in the September 1 SpaceX explosion. It was a rupture on a carbon composite overwrapped pressure vessel (COPV) carrying helium within the Falcon 9 second stage. What wasn't yet established was what led to such rupture.

Putting aside conspiracy theories like the rocket having been sabotaged (shot at), in a recent conference call Elon Musk talked about the formation of solid oxygen around the vessel. What led to this, however, also isn't established.

However, what's interesting is another very credible theory brought about by SpaceNews.com. The theory holds that SpaceX might simply not have a reliable enough COPV for the conditions it's used in. This is so because while COPV tanks are commonplace in rockets, the environment SpaceX uses its COPVs on is different from most other applications and much more challenging.

In the Falcon 9, these COPVs are inside liquid oxygen tanks. They're thus used in a cryogenic environment, which apparently can have large temperature gradients which are difficult to control and predict. Of course, a wrapped tank with several layers of material is particularly sensitive to extreme temperature gradients, especially those it was not necessarily conceived to handle, since even a minor slippage of a layer will compromise the tank.

Furthermore, a previous June 2015 SpaceX explosion also involved the same helium tanks. At the time, it was attributed to weakness in struts connecting to these tanks, but this is a theory that isn't bought by all specialists. So, we might actually be in the presence of the second failure having a similar origin. That is, a failure whose root cause has not been fixed.

Moreover, and this gets interesting, these two events where COPV tanks are involved came after SpaceX changed the COPV supplier. Indeed, it didn't just change supplier, it went from buying those tanks from an experienced supplier (Cimarron Composites) to building them in house. Hubris, like at Tesla, seems to make SpaceX think it can do anything better than others.

As such, it's credible - likely, even - that these tanks were and are failing because of a design issue and not a "business process" as advanced by SpaceX.

This Is Where It Gets Relevant For Iridium

So what's the problem for Iridium here? There are several pathways to the problem:

  • If SpaceX recognizes it has a design issue: Then fixing it will necessarily take much more time than just adjusting some operational procedure. This would thus lead to delayed launches for every customer, including Iridium. It would make it even more impossible for Iridium to have its new birds flying in time.
  • If SpaceX deems it an acceptable risk to fly without fixing the underlying condition: Here, two things can happen. One is that a failure in another rocket might again delay everything for every customer (including Iridium). Within the number of launches necessary for 2017, this seems likely to happen if indeed the underlying condition persists. The other is that such a failure could actually happen on an Iridium flight carrying 10 satellites. This would be catastrophic for Iridium's launch schedule and finances (if not directly because of insurance covering the cost, then indirectly because of the cost of insurance for the later flights).
  • If SpaceX decides it's an acceptable risk to fly again without fixing the underlying condition, but taking measures to reduce the risk: This, too, is a huge problem for Iridium. It is so because the measures which can be taken are connected to using lower helium pressures and reducing the rocket's propulsion in general. It so happens that the Iridium payloads are some the heaviest yet to be carried by the Falcon 9 and so quite probably the ones most likely to be affected or not launched at all.

Any way you look at it, the developments regarding the cause of the September 1 SpaceX explosion seem to increase risk for Iridium launches. This is so unless SpaceX actually puts the problem down to operational procedures, and is right about those - which seems unlikely given the coincidences at hand (2 explosions connected to the COPVs, this coming after a COPV supplier change, the COPVs being used in extreme conditions).

Conclusion

There are multiple paths to failure for the Iridium NEXT launches which are connected to the recent SpaceX explosion. These paths to failure are independent from the already delayed schedule.

This means the risk to Iridium's schedule or actual rocket launches is now materially larger even beyond the impact from the initial delays.

Disclosure: I am/we are short IRDM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.