Ariane 6, Coface Financing Dominate French Space Meeting

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PARIS — The French government will reform its Coface export-credit agency to enable it to offer financial backing to satellite projects at the same rates as its American counterpart, France’s space minister said Nov. 11

Genevieve Fioraso’s announcement followed a meeting of Cospace, a government-industry organization that coordinates French space policy. A joint statement bearing the stamp of France’s defense, research and industry ministries, as well as the French aerospace industries association, said the parties “discussed the adaptation, already under way, of our system of export aid managed by Coface to make it as effective as the US Ex-Im Bank.”

Coface used to dominate export credits for satellite projects. But in the past five years the U.S. Export-Import Bank, aided by the arrival of a commercially competitive launch services provider, Space Exploration Technologies Corp., has surpassed Coface in total financing commitments.

Briefing reporters after the meeting, Fioraso, who is France’s state secretary for higher education and research and will lead the French delegation to the Dec. 2 conference of European space ministers, was guarded in her assessment of whether Germany had been won over to the idea of building an Ariane 6 rocket starting next year.

Fioraso said a preliminary meeting of several European governments Nov. 13 in Cologne, Germany, would provide a better indication of whether Germany, which has questioned Ariane 6’s cost, risk and urgency, had now resolved to back the vehicle’s development. As of press time, however, it was still unclear whether France and Germany had reached an agreement on the direction and funding of future launcher programs.

Under a French-backed proposal that has become the position of the 20-nation European Space Agency, European governments would spend some 8 billion euros ($10 billion) on all its launch activities between 2015 and 2024, including about 4.3 billion euros to develop Ariane 6.

Fioraso said open issues included whether to finance the new vehicle’s full development now, or to fund only increments of several years pending achievement of development milestones.

The new vehicle would fly starting in 2020 and would place most risks associated with its commercial success on the shoulders of a joint-venture company that would manage development. In return, the joint venture would be guaranteed, on average, five guaranteed-price European government missions per year between 2015 and 2024.

Fioraso said that Germany’s questions about Ariane 6 “were all legitimate,” and that the answers provided in a document produced by ESA Director-General Jean-Jacques Dordain answered them (see below). But she cautioned that some open issues may not be settled at the Nov. 13 meeting.

Ariane prime contractor Airbus Defence and Space and rocket-propulsion provider Safran now plan to create their joint venture by Dec. 1, in time to present its legal structure to ESA ministers convening the following day.

Francois Auque, head of the Airbus space division, said the joint venture would gather together both the civil and military activities and ultimately would include Europe’s Arianespace commercial launch provider.

Auque’s statement was made at the press briefing following the Cospace meeting, which featured French Defense Minister Jean-Yves Le Drian.

One inference that could be drawn from Auque’s remarks is that French defense officials have dropped their opposition to the joint venture’s inclusion of missile systems teams, which work together with Airbus’ Ariane rocket development group in the joint venture.

Auque said the inclusion of Arianespace into the joint venture will not happen immediately, and that the 34.7 percent ownership of Arianespace now held by the French space agency, CNES, would need to be transferred to the new company first.

Fioraso and CNES Chief Executive Jean-Yves Le Gall declined to detail the conditions under which CNES’s Arianespace shares would be transferred to the joint venture, and whether Airbus and Safran will be expected to make a cash payment to CNES.

“We’re in the middle of negotiations,” said Marwan Lahoud, who attended the briefing in his capacity as head of France’s GIFAS aerospace industry association but is also Airbus’ chief strategy and marketing officer.

Coface vs. Ex Im

Fioraso, after telling reporters that Coface needs to be reformed to offer financings as attractive as the U.S. Export-Import Bank, left it to Thales Alenia Space Chief Executive Jean-Loic Galle to elaborate.

Galle, whose business is centered more on satellite manufacturing than on rocket production, said the U.S. Export-Import Bank has been able to offer direct loans at rates that are “a couple of percentage points lower” than what Coface has offered.

One reason, Galle said, may be that Coface provides loan guarantees to banks which then structure and manage the loans, and also agree to take the risk associated with a small piece of the loan package.

Galle said the Coface procedure adds complexity and personnel to each Coface transaction that may be responsible for the higher loan rates.

A second difference, Galle said, is that the Export-Import Bank is willing to loan sums equivalent to the total project amount, including work done by non-U.S. subcontractors working for a U.S. prime contractor.

Coface, he said, limits its loan guarantees to amounts corresponding to work actually done in France.

Coface and the U.S. Export-Import Bank both operate under an “Arrangement” coordinated by the 34-nation Organization for Economic Cooperation and Development.