New Launchers Require New Arrangement

Europe’s launch sector is demanding changes in the Arianespace governance and shareholding structure in return for increased financial support. The European launch provider has asked for a capital injection from shareholders and a new public support mechanism to help it counter growing competition from lower-cost players and help defray the extra burden of operating two new launch vehicles—the Soyuz 2 medium lifter and Vega light booster—from its Kourou, French Guiana, spaceport (AW&ST Oct. 18, p. 31). Arianespace Chairman/CEO Jean-Yves Le Gall will not say how much the company is requesting, but industry executives say the capital injection would amount to €100 million ($136 million), perhaps spread between 2010 and 2011; and the price support program, €120 million per year. A previous support scheme for the Ariane 5, dubbed European Guaranteed Access to Space (EGAS), expires toward year-end. The pressures on Arianespace come as France and Germany, Europe’s two biggest launch powers, are involved in high-level discussions on a midlife upgrade to the Ariane 5 (the Ariane 5 ME) and the vehicle—dubbed Ariane 6 but officially known as the Next-Generation Launcher (NGL)—that will follow it. The French position, echoed by Arianespace, is that market changes, such as a gradual increase in midsize payloads that are typically paired with larger satellites in Ariane 5 missions, are eroding the Ariane 5’s dual-mission business case. The Germans say the Ariane 5 will continue to be needed for institutional missions and that the NGL should be a complement, not a replacement, for the existing vehicle. They also want agreement on developing the Ariane 5 ME, now in the detailed definition phase, before starting work on the NGL. The European Space Agency’s launcher director, Antonio Fabrizi, says it’s clear that the current European launch setup, which was established for the Ariane 5 and its predecessors, must be altered to accommodate Vega, Soyuz and the NGL, and that a mechanism for supporting costs beyond those already agreed for the Ariane 5 will be necessary. “EGAS was a temporary expedient, he says. “We’re now talking about long-term support.” Fabrizi notes that the ESA members states have already missed a deadline, set at the 2008 ministerial council, which gave them a year to devise a solution. “We need to decide something pretty quickly—certainly no later than 2012.” The Arianespace suppliers, which control almost 70% of company stock, say they are willing to provide additional funding, but they will tie this to changes in how Arianespace does business. “We don’t like management coming around at the last minute and taking a launch contract at a loss to meet annual objectives,” says Evert Dudok, CEO of the satellite division at EADS Astrium, which together with other EADS companies owns more than 30% of Arianespace. “We also will insist on additional cost-cutting.” Agency heads echo this position. “If more support is needed, we will need more transparency on costs, and more influence on decision-making,” says Johann-Dietrich Woerner, director of German aerospace center DLR. “And we will demand a clear priority for institutional missions,” he remarks, referring to a mission switch this fall that forced ESA to delay the launch of Europe’s second Automated Transfer Vehicle until next February (AW&ST Oct. 4, p. 24). But industry and agency officials say the concern goes beyond mere governance, and extends to the shareholding structure itself, in which French space agency CNES owns 32.5% of the stock. Some of the ESA countries involved in the launch sector, led by Germany, are reviving a call, dormant for several years, to shift to all-private ownership. Others, led by France, are suggesting the company should be fully controlled by public entities, officials say. A third group would leave the present mixed public-private shareholding setup in place, but with a revamped governance setup. “We all agree on the goals,” says Woerner, “but we differ on how to reach them.” Three of the key entities involved—Arianespace, CNES and Italian space agency ASI, Europe’s No. 3 launch power—decline to comment on the specifics of the discussions, including whether CNES should sell its holding. Yannick d’Escatha, the CNES director, does say, however that the agency would be ready to match any capital increase and would back an extension of public support beyond EGAS. The issue is complicated by a number of factors outside the launch sector, Fabrizi notes, particularly European Union plans to assume a stronger space role, including exploration and access to space. ESA itself could also play a role, he says; although it could not become a shareholder as such, it could hold shares on behalf of other agencies. Because of the complexities in dealing with such issues, Fabrizi says it might be necessary to adopt a two-step process for revamping the launch setup, with an initial stopgap solution toward year-end and a longer-term arrangement at a later date. However, a decision on Ariane 5 ME and NGL is governed by market-driven milestones, Fabrizi notes, and cannot wait. DLR sources say the German-French NGL working group will complete its work by the end of November.