Officials Ponder Arianespace’s Future as Consortium Gears Up for Busy 2011

Ariane 5

As Arianespace celebrates a successful year in which it went 6-for-6 with Ariane 5 launches and looks forward to the introduction of the Soyuz and Vega rockets in Guiana later this year, European officials have been trying to figure out how to help the consortium avoid a loss:

Europe’s Arianespace commercial launch consortium on Jan. 4 said revenue for 2010 dropped by about 10 percent compared to 2009 and that the company will report a loss unless it receives requested financial aid from European governments.

The Evry, France-based company conducted six launches of its heavy-lift Ariane 5 rocket in 2010, down from seven in 2009, and this is the main reason for the revenue drop, to slightly more than 900 million euros ($1.2 billion), in 2010.

In a press briefing here, Arianespace Chief Executive Jean-Yves Le Gall said the company would normally report a loss when it closes its books this spring but may be able to avoid it if the 18-nation European Space Agency (ESA) agrees to a new series of subsidies to offset operating costs at Arianespace and its contractors.

ESA governments in mid-December agreed in principle to some sort of cash injection. But the agency’s resolution left out any reference to a proposed package totaling 120 million euros per year for at least two years.

Space News reports that a 12-member study committee has proposed a set of “radical” proposals designed to deal with Arianespace’s profitability issues and continued need for government subsidies:

Among them is that European governments should impose an annual levy of around 3 million euros ($4 million) on commercial satellite fleet operators for each satellite that is stationed at a European-registered orbital slot. The proceeds, totaling around 100 million euros per year, would be put into a fund to be drawn down in those years when launch service revenue does not match operating and maintenance costs.

The report says such a fee, which could be collected by ESA and dispersed under clearly defined procedures, likely would require specific legal steps to be put into effect. Satellite operators, it says, benefit from the existence of a viable European launch service provider even when they do not elect to use it. By its presence in the market, the Evry, France-based Arianespace consortium prevents other rocket suppliers from increasing costs….

Generating an additional 100 million euros may not be enough, the report says, even if the modular vehicle it prescribes is built and in operation around 2025.

Scrapping the current industrial and political organization centered on Arianespace may also be necessary, it says. Arianespace “lacks the financial capabilities to face the normal risks of commercialization,” and suffers from an insufficient involvement by ESA member governments, and the executive commission of the 27-nation European Union.

Placing a smaller Arianespace inside Astrium Space Transportation, the Ariane 5 prime contractor, is one option. Another is to transform Arianespace, and the commercialization of all European launch vehicles, into an “ESA Special Project.”

The turmoil comes as Arianespace has hit its stride with the Ariane 5 launcher and is diversifying with new Soyuz and Vega rockets set to make their inaugural flights from Kourou this year. In a year-end review released today, the consortium celebrated its success in 2010 and looked forward to the future:

Eight straight years of successful launches

With 41 successful launches in a row since 2003, Ariane 5 continues to confirm its technical maturity and demonstrate its operational capabilities. Ariane 5 is the only launcher on the market capable of simultaneously launching two payloads, while also handling a complete range of missions, from commercial launches into geostationary orbit, to launches of scientific spacecraft into special orbits.

With six Ariane 5 ECA launches in 2010, Arianespace orbited 12 of the 20 commercial geostationary communications satellites that were successfully launched during the year. Furthermore, in October 2010, Arianespace and Starsem teamed up to orbit the first six satellites in the Globalstar-2 constellation.

Record backlog

Arianespace enjoyed an equally impressive year in terms of orders booked. The company confirmed its world leadership by signing a total of 12 Ariane 5 contracts for geostationary satellites, out of a total of 19 open to competition. Arianespace also signed seven new contracts for Soyuz launches, which will place 12 satellites into special orbits.

As of January 4, 2011, Arianespace’s backlog of orders stood at 29 geostationary satellites, six Ariane 5 launches of the ATV (Automated Transfer Vehicle) to the International Space Station, and 18 Soyuz launches – a new record.

Renewed support for European launchers

At the end of 2010, the countries belonging to the European Space Agency unanimously passed a resolution to support European launch vehicles, which guarantees the company’s long-term viability.

Furthermore, Arianespace’s shareholders have restored the company’s equity, enabling it to continue its development.

The Arianespace family takes shape in 2011

Arianespace will meet new challenges in 2011, as the complete European family of launch vehicles enters service. No less than six Ariane 5 launches are scheduled, including for the ATV 2, “Johannes Kepler”, on February 15.

Arianespace will begin operating the Soyuz launch complex in April, and plans to carry out at least two Soyuz launches during the year from the Guiana Space Center. At the same time, Arianespace has planned three Soyuz launches from the Cosmodrome in Baikonur, Kazakhstan.

Arianespace and ESA have also signed the production contract for the first operational launch of the Vega light launcher, while Arianespace and ELV have signed the VERTA framework contract concerning the supply of five Vega launchers following the qualification flight. Arianespace will take over responsibility for Vega launch facilities at the end of June, then carry out the first Vega launch during the second half of the year.

Arianespace plans a total of 12 launches in 2011.

It will be interesting to see what happens. This certainly points to the complexities of the launch market, something America needs to carefully consider as it moves toward relying on commercial providers.