ILS Sets a New Course with a Focus on Performance
  
 

ILS is now a stand-alone company, focused on a single product, the Proton Breeze M.


"We want the Proton to be synonymous with solid, reliable, on-time performance," says Frank McKenna, ILS president.


McKenna, who took over the leadership of ILS Oct. 11, lays out his vision for the future.


Previously, we were focused on obtaining market share with multiple products - the Proton and the Atlas - and the business had been organized to support that. Now we're restructuring the company around new objectives, the first of which is a focus on performance. We believe that ILS will continue to prosper if we focus on consistently meeting our commitments to our customers with a dependable and proven launch system - the Proton M/Breeze M. In setting our new course, we have restructured the organization, aligned our partner relationships, changed our business model and focused our efforts to ensure we meet our commitments to launch successfully and on time.

  
 Our focus on performance includes the following:
1) Streamlined organization and decision-making
2) Every employee engaged to improve performance
3) Manifest management agility
4) Production and quality with our partner, Khrunichev
5) Subcontracting value across the board
6) Launch operations and campaign management
7) Increased efficiency and improvement initiatives
  
 The second objective of ILS is to win new business that is profitable. Striving for market share, and the attendant fierce competition and significant reductions in pricing, has led to losses and financial debt. This is not a sustainable business position in the long run. The establishment of a stand-alone ILS that is financially restructured without debt, and with a solid backlog of missions, provides the foundation for a great business for commercial Proton.
  
 The Proton system is targeted for the intermediate/heavy-lift market. ILS will move to a business model of 3-5 Proton launches a year. We have realigned our pricing structure to fit this business case, and expect market price stabilizing and equilibrium for 2008-09. This means that the launch element of the space-based telecommunications value chain will be rationalized and achieve returns commensurate with the value contributions made by this segment.
  
 Khrunichev will soon become one of four major centers as part of the consolidation of the Russian space industry. This complements an ongoing effort to vertically integrate the Proton product line. Propulsion systems and other hardware manufacturing will be directly under Khrunichev management control to provide greater means of controlling cost while improving quality and schedules.
  
 All of these efforts comprise the new course for ILS going forward: A focus on performance and winning profitable new business within a new stand-alone organization tailored to meet the launch needs of the space-based telecommunications business.