Vega Prime Contractor Avio Expects To Find Strategic Owner This Year
LE BOURGET, France – The prime contractor for Europe’s Italian-led Vega small-satellite launcher said 2015 will be the year when the company finds a strategic owner and helps settle the broader European space-launch puzzle.
Pier Giuliano Lasagni, chief executive of Avio SpA, said that while he could not speak for private-equity investor Cinven, which has been trying to sell its 81-percent Avio stake for more than two years, all the pieces of a transaction appear to be coming into place.
Colleferro, Italy-based Avio is the industrial prime contractor for the Vega rocket. Vega has successfully completed its first four launches, with multiple mission profiles and a change in the guidance, navigation and control system following French government refusal to allow Vega continued use of the French-built package.
The fifth launch, of the European Commission’s Sentinel 2A Earth observation satellite, is scheduled for June 23.
Briefing reporters here June 15 during the Paris Air Show, Lasagni said he took at face value the statements of Finmeccanica management saying the company wants a majority stake in Avio. Finmeccanica has a 14-percent ownership share, with 5 percent of Avio owned by company management.
“Due diligence has begun” with Finmeccanica, meaning Avio is disclosing its financial status to Finmeccanica representatives in view to a sale. But Lasagni conceded that his company has been on the verge of a transaction previously, only to see the deal evaporate.
Avio reported 2014 revenue of slightly more than 220 million euros ($250 million at current exchange rates), with a firm order backlog of more than 670 million euros as of Jan. 1. The company spends 18 percent of its revenue in research and development and has 700 employees.
Avio is also coveted by Airbus Safran Launchers, a joint venture that is prime contractor for Europe’s Ariane 5 heavy-lift rocket and its Ariane 6 successor and is soon to own 74 percent of Europe’s Arianespace launch consortium.
Italian government and industry officials have said Italian authorities want Avio to remain Italian-controlled, which would argue in favor of a takeover by Rome-based Finmeccanica — if the company can meet the transaction requirements of Cinven.
Cinven sold the non-space businesses of Avio to General Electric of the United States in December 2012, with only the space business remaining.
Since then, prospects for Avio’s rocket work have substantially improved. European governments in December approved an upgrade to the Vega rocket, called Vega C, to boost the vehicle’s payload-carrying power to low Earth orbit by 20 percent, to 1,800 kilograms.
A further Vega enhancement, called Vega E, would raise capacity to 3,000 kilograms to the same low Earth orbit. Both Vega C and Vega E will be using the P120 solid-fueled motor that powers the Ariane 6 vehicle’s strap-on boosters. This is the kind of synergy that European governments wanted to see when the approved the Ariane and Vega upgrades.
The German government in December agreed to invest in Vega as well. German industry has said it can build the P120 stages for 30 percent less using new technology, and ESA governments have agreed to open a second Vega stage production line in Germany if these claims prove accurate.
In addition, Germany has expressed interest in building the Vega E upper stage to replace the Avum propulsion module now provided by Yuzhnoye Design Office of Ukraine.
Lasagni said Avio, with the backing of the Italian government, has been working on a liquid oxygen/methane upper stage for Vega with Russian companies, but that these efforts have been stalled because of a lack of funding.
While Avio is the industrial prime contractor, it is a joint venture called ELV — 70-percent Avio, 30-percent the Italian Space Agency — that delivers the Vega rockets to Arianespace for government and commercial use from Europe’s Guiana Space Center in South America.
Lasagni said that just as the French government is selling its shares in Arianespace as part of a trend to give European industry more control and responsibility over rocket development and production, there is a similar discussion in Italy over ELV shares.
One scenario that has been discussed is for the Italian Space Agency to sell its ELV shares to industry — Airbus Safran Launchers is a logical choice — while insisting on an Italian owner for Avio.
“What we are looking for is a balance, an equilibrium between the big companies and the small” in Europe’s launcher sector, Lasagni said.