WASHINGTON — Maxar Technologies plans to significantly reduce its capital expenditures after completing construction of its next-generation WorldView Legion constellation so that the company can focus on curbing its $3 billion debt load.

Howard Lance, Maxar CEO, said the continued languishing of the company’s satellite manufacturing division Space Systems Loral is a “distraction” from an otherwise growing company, and that divesting that division will also help pay down debt.

In a presentation Nov. 28, Lance said unloading SSL’s geostationary satellite manufacturing business will help Maxar de-lever regardless of how that plays out — be it through a sale of SSL or of the 29 acres of real estate it sits on in Silicon Valley.

Maxar is in the process of building WorldView Legion, a constellation of numerous small satellites that will replace its three oldest satellites: the 11-year-old WorldView-1, 10-year-old GeoEye-1, and nine-year-old WorldView-2 satellites. Ball Aerospace built the first two WorldView satellites, while General Dynamics built GeoEye-1.

Maxar estimates building WorldView Legion — for which the number of satellites has not been announced — in-house will more than halve costs compared to the larger, earlier satellites. Whereas GeoEye-1, WorldView-1 and -2 cost more than $1.3 billion to build and launch, WorldView Legion has a projected price tag of $600 million.

Once construction is finished in 2020, Maxar will begin a “significant reduction in capex and a commensurate increase during that time of free cash flow causing a rapid deleveraging,” as debt reduction becomes a priority, Lance said.

“Our commitment is to use available free cash flows to pay down debt [and] reduce leverage over time,” he said.

Maxar has more savings it can wring from last year’s merger of satellite and space hardware builder MDA Corp. and Earth observation satellite-operator DigitalGlobe (which formed Maxar) by combining backend functions such as accounting, human resources and information technology, Lance said.

Lance said Maxar’s capex holiday should last at least three years after the completion of WorldView Legion. The constellation is slated to launch in 2021, he said.

Maxar announced a contract in March with SpaceX to launch the “initial block” of WorldView Legion satellites on two Falcon 9 rockets with previously flown first-stage boosters. To date no other launch contracts have been announced for the WorldView Legion constellation.

Lance did not give a specific target for how much debt Maxar will seek to pay down during those three years or what would follow 2023.

“In terms of the ultimate target, I think that capital structure targets have everything to do with what’s going on in the macro-environment at the time,” he said. “How much debt you want to have has a lot to do with how much debt costs.”

Lance said a debt to equity ratio of between 2.5 and 3 would be an acceptable range compared to today’s leverage of around 4.3 times.

Lance said Maxar still intends to announce a divestment move with SSL this year. Maxar is keeping SSL’s ability to build small satellites for remote sensing and telecommunications in order to win deals with government customers and constellation operators.

Maxar is on a team with European satellite manufacturer Thales Alenia Space that is competing to build Telesat’s $3 billion low-Earth-orbit internet constellation. Telesat of Ottawa, Canada says it will downselect between the Maxar-Thales Alenia Space team and Airbus Defence and Space in the spring of 2019, but hasn’t announced how many of the 300 satellites the winning company will build.

Lance said a strength of the Maxar-Thales Alenia Space team is that it can offer a diversity of options rather than let the constellation market be dominated by Airbus.

“Whether Telesat wants to have the entire industry tied up in one supplier, we don’t think so and that’s why we are pursuing this,” he said.

Airbus Defence and Space is building 900 internet satellites for OneWeb through a joint venture it has with the company, and has already built a factory in Florida to build two OneWeb satellites a day.

Thales Alenia Space has past constellation experience with Globalstar’s 24-satellite system, O3b Networks’ first-generation fleet of 20 satellites and most recently Iridium’s 81-satellite Iridium Next fleet.

Lance said Maxar’s understanding of Telesat’s contract is that it will be a winner-take-all competition, but cautioned that Telesat could change its mind. Maxar and Thales Alenia Space would split the revenue from Telesat LEO evenly, according to a Maxar presentation.