Arianespace gets back on track

July 4, 2006

(Flight International via NewsEdge) Arianespace CEO Jean-Yves Le Gall has devoted his career to the European space industry. In his current role, he is building on the foundations of the "important and impressive" year that was 2005 and looking forward to growing the business in the second half of the decade.

Last year, Arianespace passed several key milestones: it completed its Ariane 5 ECA return-to-flight plan, and qualified the ECA with a second successful launch - one of five last year, including three basic Ariane 5Gs.

And Le Gall's confidence about the business's future does not seem misplaced as Arianespace and subsidiary Starsem, of which Le Gall is also chairman and CEO, together boast the largest order book in the launch services industry, with 41 satellites to be launched by Arianespace and five by Starsem.

Next year, Arianespace plans to launch five to six Ariane 5s per year for a total of 10-12 satellites. This is well ahead of competitors in the commercial launch market, which are hovering in the region of four single-satellite launches per year.

Further ahead, Le Gall says as many as eight Ariane 5 launches in 2008 are a possibility and that this can boost the space transport company's turnover by 10-15%.

The company is pulling subsidiary Starsem, which is partly owned by Russian shareholders and EADS and offers commercial launches of the Soyuz, closer into the fold, and expects to have a "completely integrated three-launcher system" by 2009. This will include the European Vega small launcher under development.

"Our objective is for 10 launches in 2010, a mix of all three. We will increase our revenues and our flexibility. Soyuz will bring business to Ariane, and vice versa," he says.

Le Gall says launch prices have risen 30% in the last two years. "For a given mass, customers are prepared to pay for quality. In the past, decreases in price may have led to decreases in quality. Now everyone is convinced that quality has a price and that you have to pay that price."

And his optimism extends further. Financially, the company appears to be back on track.

In 2005, Arianespace balanced its books for the third year in a row.

"The market is better than was expected a few months ago. Arianespace signed nine contracts last year and 2006 looks good. Our launches have given customers confidence," he says. Out of a total of 20-25 orders forecast in 2006, Arianespace expects to take half.

"We are in a stabilized situation. We are now working with just three suppliers: EADS for Ariane, the Russians for Soyuz and ELV for the Vega. And we get ESA funds to cover some of the fixed costs of the Ariane system, the same as in the USA and Russia, so we are on a level playing field," he explains.

But he acknowledges that there is a need for caution in a rapidly changing market, and one that is being driven by two distinct areas of potential new business: HDTV, which needs a lot of capacity in orbit, and the Internet.

 

"The key word is flexibility. Things are changing."

International cooperation is key, he adds. Through Starsem, Arianespace offers Soyuz launches from Baikonur. "We use the same manifest for Ariane and Soyuz, so we can transfer spacecraft between them. By selling more than one launch vehicle, we can get the customer in orbit on time."

The market is also becoming increasingly open. "Russia is launching government satellites, which just a few years ago would have been unthinkable," he says.

He adds that it is also becoming more commercial, although governments will continue supporting launch companies until the commercial market is big enough that they can be sure of launching their satellites.

"Ariane ECA is fitted to the market. The next [launcher] development will depend on what is decided at the ESA ministers meeting in 2008. We are working with ESA and industry to determine what our position will be by 2007 on the follow-on. ECA is the perfect tool," he says.

Arianespace is also diversifying, being the first to offer insurance services to cover launches, then to offer financing. It is now providing a back-up solution through its launch services agreement with Boeing and Mitsubishi.

Other programs also offer new opportunities. Arianespace is interested in participating in the NASA commercial crew/cargo services program. The first ESA automated transfer vehicle (ATV) launch in spring 2007 will carry cargo to the International Space Station, and Le Gall expects Ariane 5 and a commercially operated ATV to play a role in sending payload to the ISS after the Space Shuttle is retired in 2010.

Other changes may open new doors for the Arianespace.

"The Boeing/Lockheed United Launch Alliance demonstrates that the US government wants to increase efficiency. There are three different lines of US launchers - Atlas V, Delta IV and Delta II - and this is too many," Le Gall says. "The logic would be to downselect to one primary launcher. We will have to see which one."

c 2006 Reed Business Information - UK

c 2006 Dialog, a Thomson business. All rights reserved

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