It was the best of times. It was the worst of times. And wouldn't you know it -- it was both of 'em within a span of 24 hours.
On Sunday, the groundbreaking (water-parting?) joint venture that was Sea Launch -- a cooperative effort among Boeing (NYSE:BA), and various partner companies from Norway, Ukraine, and Russia -- recorded its latest success. The consortium successfully launched an Orbital Sciences (NYSE:ORB) communications satellite into orbit for Malaysia's MEASAT Satellite Systems from a launchpad at Kazakhstan's Baikonur Space Center.
Hold up a sec. What do you mean "that was Sea Launch"?
Oh, right. That's the bad news: Sea Launch is toast. You see, Sea Launch sent the bird flying skyward on Sunday, at 21:50 Greenwich Mean Time. A few hours later, the partners filed into U.S. Bankruptcy Court for the District of Delaware and requested protection from their creditors. Put bluntly, Sea Launch is bankrupt.
Over its 15 years in business, Sea Launch helped put some of today's leading companies on (or above) the map, sending satellites arcing into orbit on behalf of DirecTV (NYSE:DTV), EchoStar (NASDAQ:SATS), and Sirius XM Radio (NASDAQ:SIRI). But Sunday's launch for MEASAT may well be its last.
The problem is that Sea Launch is in dire straits, possessing less than $500 million in assets with which to satisfy more than $1 billion in liabilities. And while technically, Monday's filing called for a Chapter 11 restructuring, the company's intention to sell off "one or more" of its divisions suggests that whatever emerges from the other end of this bankruptcy process may be unable to perform as Sea Launch was intended.
Perhaps the best that can be hoped for -- from an investor's point of view -- might be that the parties who formed Sea Launch in the first place would bid for the to-be-divested divisions and make more profitable use of them independently. Boeing, for example, could perhaps gather whatever Sea Launch flotsam floats to shore, and use it to strengthen its United Launch Alliance partnership with Lockheed Martin (NYSE:LMT).
Foolish takeaway
Boeing will almost certainly need to take a charge against earnings based on its subsidiary's failure. But such creative destruction is part and parcel with capitalism. (At least, in theory.)
Perhaps Sea Launch was a bad idea doomed to fail. But perhaps, by moving business from Sea Launch to ULA, Boeing won't need to share its launch revenues with so many partners. Seems to me, Boeing may profit from this failure yet.
