PARIS—Rocket engine builder Safran on April 26 said its Airbus Safran Launchers (ASL) joint venture to be “fully operational on the 1st of July” following a resolution of “technical and administrative formalities.”
In a conference call with analysts to announce Paris-based Safran’s quarterly earnings, Safran Chief Executive Philippe Petitcolin said the inquiry by the European Commission into ASL’s takeover of the Arianespace launch consortium was moving forward on a parallel track to the development of ASL.
“I remind you it is not an investigation, it is an inquiry,” Petitcolin said. “We answered a first set of questions, and we had a second set. We are fully responsive and cooperative. They wanted to get more information, or maybe to better understand the answers we gave.”
The European Commission, which is the executive arm of the 28-nation European Union, is probing whether ASL’s purchase of the Arianespace shares now held by the French space agency, CNES, would undermine competition by allowing ASL to ride roughshod over Arianespace’s smaller shareholders.
Those smaller shareholders are, like ASL, mainly Ariane rocket contractors whose work, in some cases, overlaps what ASL can do in-house.
The commission is also examining the “Chinese Wall” protections that ASL has set up to separate its role in Arianespace from its role as a major builder of commercial telecommunications satellites. Other satellite builders want assurances that Airbus satellites will not be given favored treatment by an ASL-dominated Arianespace.
ASL has asked the commission for 10 additional days to answer all the commission questions, meaning the inquiry will now last until July 27 at the latest.
The full creation of the 8,000-strong ASL work force has been slowed by negotiations between Airbus and French tax authorities over Safran’s cash payment to Airbus of 800 million euros ($900 million). The two companies had agreed, following a valuation of ASL’s business as prime contractor for the current Ariane 5 and future Ariane 6 heavy-lift rockets, that this payment would give Safran a 50 percent share of ASL, which is what Safran had wanted.
Airbus has been looking for ways, in concert with French tax authorities, to reduce the tax bill it will owe on receipt of the Safran money.
Safran officials did not reaffirm the 800-million-euro figure during the April 26 call, nor were they asked about it.
The payment will coincide with Airbus and Safran’s merging their rocket-production teams. Only some 450 people now work at ASL, whose primary focus is preparing a formal Ariane 6 contract proposal to the 22-nation European Space Agency, whose final go/no-go review of Ariane 6 will occur this summer, with Ariane 6’s inaugural flight scheduled for 2020.
Safran Chief Financial Officer Bernard Delpit said during the conference call that the company expected final signatures for full consolidation of ASL “very soon. As for the closing, it will be at the end of this semester. So we expect the joint venture to be fully operational in July.”
ASL officials have said an early July finalization of ASL’s structure will allow the company to make the kind of binding financial commitments to ESA that the agency has set as a requirement for releasing the remaining Ariane 6 development funding.
