Airbus: Rocket joint venture with Safran awaits French tax ruling
KOUROU, French Guiana – Europe’s Airbus Safran Launchers joint venture company, which is leading development of the next-generation Ariane 6 rocket, has fallen behind its development schedule as it awaits a ruling by French tax officials on an expected cash payment from Safran to Airbus, Airbus Space Systems chief Francois Auque said Jan. 26.
Auque conceded that French tax authorities were asked to provide their input “a little late in the process” and that it is this delay that has stalled full implementation of the joint venture.
He implied that the schedule delays were more the fault of the joint venture partners than of the French tax people.
Airbus and Safran, whose Snecma division makes rocket motors, agreed in 2014 that they should have equal shares of the joint venture, which will lead development of Ariane 6 and also take firmer control of both the current Ariane 5 rocket and the Arianespace commercial launch consortium.
The French space agency, CNES, has agreed to sell its 35 percent stake in Arianespace to Airbus Safran Launchers for 150 million euros, or about $162 million at current exchange rates. Once completed, the transaction will give Airbus Safran Launchers a 74 percent ownership share of Arianespace.
Airbus is bringing far more assets than Safran to the joint venture, including Airbus’s work on French strategic missiles. The two companies agreed that Safran would make a cash payment of 800 million euros to balance their ownership shares.
Safran officials have not provided details to shareholders on what return the company expects on its investment, and whether it was more strategic or financial concerns that drove the decision. The space-launch market is known as a low-margin business, but the Airbus-heritage military component of the joint venture may offer returns more in line with what Safran expects of its business divisions.
Auque’s comments Jan. 26 during a press briefing in Paris did not suggest that Safran was having second thoughts about writing a check for 800 million euros, but only that Airbus wanted to weigh its options following the French authorities’ analysis of the tax consequences for Airbus.
Auque said Airbus Safran Launchers has been stuck at the approximately 400-person employment level while the two companies await the tax ruling. Ultimately the joint venture should employ more than 4,000 people, he said.
“We had planned to move to Stage 2 of the joint venture’s activities as of Dec. 31, 2015,” Auque said. “We have obviously missed that date, and every day we want now is a day of delay.”
European Space Agency governments approved the Ariane 6 rocket, and an upgraded Vega small-satellite launcher, in December 2014. In doing so, they asked ESA to structure the contract to include a Program Implementation Review in mid-2016 to be sure their multibillion-euro commitment was on track to deliver on its promise.
Ariane 6 is scheduled to make an inaugural launch in 2020 and to allow Airbus Safran Launchers to drop the commercial price of Ariane launches by between 40 and 50 percent, measured on a per-kilogram basis, compared to today’s Ariane 5.
Auque declined to provide financial results for the Airbus space division, but said its book-to-bill ratio in 2015 was “far, far superior” to 2014, which parent company Airbus viewed as a successful year for the division.
Early indications are that 2016’s harvest of commercial satellite orders will surpass 2015, he said, and permit Airbus’s space division to hire more people in addition to the nearly 1,000 new employees – including 260 from other Airbus divisions – that were hired in 2015.
The most dramatic contract for Airbus’s satellite division in 2015 was its selection by OneWeb LLC of Britain’s Channel Islands to build 900 150-kilogram OneWeb satellites to provide global Internet access.
Airbus and OneWeb on Jan. 26 announced they had formed the company, OneWeb Satellites, which will build the OneWeb constellation – 648 satellites plus spares, for a total of about 900.
The two companies said Brian Holz, OneWeb’s chief technology offer, would be chief executive of OneWeb Satellites, in which Airbus and OneWeb will have equal ownership shares.
The first 10 satellites will be built at Airbus’s Toulouse, France, facility and launched aboard Russian Soyuz rockets – either the Europeanized version operated from Europe’s spaceport here, or the fully Russian version launched form Russian territory – in 2018.
The remaining 890 OneWeb spacecraft are to be built at a U.S. facility that industry officials say is likely to be located in Florida but has not yet been announced.
Airbus also announced Jan. 26 that it had contracted with ESA to build to additional Sentinel 2 optical Earth imaging satellites as part of the European Commission’s Copernicus program.
The contract, which was expected, is valued at 285 million euros. Airbus built the Sentinel 2A and 2B satellites and was all but certain to win the follow-on order for near-identical copies to assure that Sentinel 2 data continues to flow to users through the next decade.
The first of the series, Sentinel 2A, was launched in June 2015 and is now delivering 7 terabytes per day of data, Airbus said.