ESA assures Italy, Avio that Vega won’t be short-changed by Airbus Safran Launchers

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PARIS— Negotiations will start by June between the now fully operational Airbus Safran Launchers (ASL) and the European Space Agency on the ASL’s bid to complete construction of the future Ariane 6 rocket, ESA Launcher Director Gaele Winters said.

ASL’s submission of a fixed-price bid for the Ariane 6 is the latest indication that the program has proceeded smoothly from its original government approval in December 2014 despite delays in ASL’s formation and concerns among other European rocket-component builders about how they will fare in an ASL-dominated European launch landscape.

Pending approval by European Commission antitrust authorities in late July, ASL is to become a 74 percent owner of Europe’s Arianespace launch consortium. Avio of Colleferro, Italy, which is prime industrial contractor for Europe’s Vega small-satellite launcher and the manufacturer of Ariane 6’s strap-on boosters, has a 3.38 percent stake in Arianespace.

Avio has been worried that an ASL-dominated Arianespace would favor Ariane 6 over Vega for contracts where both vehicles could make a viable offer – for example, an Earth observation satellite could launch as the sole passenger on a Vega, or as a co-passenger on an Ariane 62 vehicle, the lighter of the two Ariane 6 versions.

Making Avio happy inside an ASL-dominated Arianespace has been complicated by the ongoing attempt by Avio’s owner, private-equity investment group Cinven, to sell Avio’s space business. ASL has said it would make a bid.

At a May 2 briefing in Colleferro, Italy, where Avio produces rocket components, a Cinven member of Avio’s board of directors said Cinven has been receiving offers for Avio for years, even before Cinven’s purchase was concluded in 2006.

“We keep getting expressions of interest in the business,” Roberto Italia said. “Avio was a supplier to the Ariane family. Now, with the evolution toward a two-launcher family encompassing Ariane 6 as well as Vega, Avio has become central to the future of the European space industry.”

Roberto Battiston, president of the Italian Space Agency, who has been vocal in saying Avio should not be sold to a potential competitor like ASL, said Italy has not objected to the fact that a non-Italian company has owned Avio. “What is important is the result, and the commitment to the [Vega] project,” Battiston said.

The situation had become so fraught that ESA Director-General Johann-Dietrich Woerner felt obliged during the May 2 briefing to guarantee to Avio that ESA would prevent any abuse of power by ASL.

“If you kick out one of the elements of the family, you destroy the whole family,” Woerner said, referring to the fact that Vega and Ariane 6 share common elements and manufacturers. “I am quite sure ASL knows this. But I can assure you that ESA will take its responsibility in making sure it is a fair and good deal for Avio.”

Asked whether ESA would favor the creation of a VegaSpace – a commercial company separate from Europe’s Arianespace that would sell only Vega launches – to protect Avio’s interests, Woerner told journalists May 9:

“Of course not. That would be a detriment to the overall program” of making Europe’s launch sector more competitive. “But Arianespace has to make [Avio] a fair deal.”

Airbus and Safran, meanwhile, said they had completed what they called the Stage 2 phase of ASL permitting the full merger of their launcher business, a step that had been delayed for reasons associated with how the French government and French tax authorities would classify the transaction.

Marwan Lahoud, Airbus’s director of strategy, said May 3 that the full company would be stood up by late June. Up to now, only a limited number of Airbus and Safran personnel had been working at ASL.

Lahoud said that, strictly speaking, it was not so much a tax issue that had slowed down finalization of ASL – meaning the treatment of a presumed 800-milion-euro ($905 million) cash payment from Safran to Airbus to bring Safran’s ASL share to 50 percent — as the acknowledgement by French authorities that the merger did not represent the “sale” of assets.

“Neither party is in the process of selling,” Lahoud said. “The idea was to find an agreement with the government signifying that this is a joint venture that both companies view as strategic. No one is disinvesting here. We will get all this concluded by the end of June.”

Ariane 6 design work has not been visibly troubled by the various side issues.

ESA’s Tender Evaluation Board received ASL’s Ariane 6 bid the week of May 3 and expects to invite ASL to discuss whatever points are unclear or unexpected, Winters said.

“We will discuss with industry any unknowns, or things we do not understand or that we consider as not in line with our expectations,” Winters said in an interview. “That will take us to the end of June. Then in July starts the real PIR.”

The PIR, or Program Implementation Review, is the final step ESA governments required before releasing to ASL and its partners the full Ariane 6 financial package. The PIR, which ESA government ministers insisted on when they approved Ariane 6 development in December 2014, is expected to result in a late-July meeting of ESA’s Launcher Program Board.

Absent any glitches, which at this point are considered unlikely, ESA’s ruling council would make a final go-ahead decision at a meeting scheduled for Sept. 13, Winters said.

While slightly delayed when set against its original industrial management schedule, the Ariane 6 program remains on track, once the PIR is through, to conduct an inaugural launch in 2020.

ESA in August 2015 signed contracts for the entire development of Ariane 6 – a 2.4-billion-euro contract with ASL, plus a contract for 600 million euros with the French space agency, CNES, to build the Ariane 6 launch installation at Europe’s spaceport in French Guiana.

The Ariane 6 industrial team has agreed to invest 400 million euros of its own money in Ariane 6 development. Following this contract, ESA released 680 million euros of Ariane 6 funding. The remaining funds await completion of the PIR.

A separate contract valued at 395 million euros was signed with Avio for the development of Vega C, an upgraded version of the current Vega.

To give ASL more margin to meet the Ariane 6 performance targets, ESA, ASL and Avio have agreed to enlarge the Ariane 6 strap-on boosters, a design change that will also mean more performance for Vega.

“Since it’s a common element, if you change something on one side, you change it on the other side,” Winters said. “So Vega will be a bit more powerful, close to 2,000 kilograms [into a polar low Earth orbit]. There is some work to be done on the system level to see how this fits in the overall Vega C program. Now they [ASL] are on safe ground with the performance for all the markets they have to serve. That’s what’s important.”

Winters said the larger booster may force a slight change in the Vega C development contract, and has already forced a delay of several months to the Vega C inaugural flight, now set for 2019.