diff -ru FreecivCVS/server/unithand.c freeciv/server/unithand.c
--- FreecivCVS/server/unithand.c	Mon Jan 31 12:09:58 2000
+++ freeciv/server/unithand.c	Sun Feb  6 00:31:30 2000
@@ -1148,7 +1148,8 @@
     */
 
     if(city_got_building(pcity, B_PALACE)
-       && cplayer->spaceship.state == SSHIP_LAUNCHED) {
+       && ((cplayer->spaceship.state == SSHIP_STARTED)
+	   || (cplayer->spaceship.state == SSHIP_LAUNCHED))) {
       spaceship_lost(cplayer);
     }