Airbus Safran Launchers awaits August European Commission competition ruling
TOULOUSE, France – The July 30 consolidation of Airbus Safran Launchers allows the transition of 7,500 employees to the new entity from the two parent companies following resolution of a tax issue but has no bearing on the investigation of ASL by European Commission authorities.
The commission recently extended, for the second time, its review of ASL’s proposed purchase of the 35 percent of launch-services provider Arianespace now owned by the French space agency, CNES. The new tentative deadline for the decision is Aug. 10.
The commission did not specify the cause of the latest delay. Commission spokesman Ricardo Cardoso said in a July 4 statement: “[T]he parties have agreed on two 10-day extensions of the Phase II investigation, as they are entitled to do according to the Merger Regulation. The deadline for the Commission to decide on the proposed merger has been extended to 10 August 2016.”
ASL, the French government and CNES have agreed to the transaction, valued at 150 million euros ($166 million). The commission is weighing measures to assure that an ASL-dominated Arianespace will guarantee fair treatment to Arianespace’s minority shareholders, to all satellite builders likely to use the future Ariane 6 rocket and to the future Vega-C small-satellite launcher to the extent that its capacity overlaps that of Ariane 6.
Thierry Mandon, France’s state secretary for higher education and research, who has minister-level responsibility for space, said in a June 28 interview with French financial daily Les Echos that ASL had made the needed concessions to resolve the outstanding issues.
But a European industry official said that was not yet the case, and that ASL was still negotiating Arianespace’s minority shareholders’ future rights and responsibilities.
ASL was formally created in January 2015. But only about 450 people from the two companies were moved to the combined entity pending a French tax review of Safran’s cash payment to Airbus in return for a 50 percent share of ASL.
Rocket-motor builder Safran’s own activities put into the joint venture would have left it with a minority stake. Safran and Airbus on June 30 said the payment would total 750 million euros ($831 million).
Marwan Lahoud, Airbus’s director of strategy, said the transaction was not a payment to Airbus so much as an investment by Safran into ASL.
French authorities apparently accepted Airbus’s reasoning. French Economics Minister Emmanuel Macron, during a June 30 press briefing following a meeting of Cospace – a French industry-government grouping that steers overall space policy – said the final step of ASL’s completion would not have occurred if the fiscal treatment of the Safran payment had not been resolved.
Macron did not provide any details on how the payment would be assessed by French tax authorities. He stressed that the ASL’s creation is more important than a simple tax matter.
“This is first and foremost a strategic decision,” Macron said, recalling that advances among Arinaesapce’s commercial-launch competitors were at the origin of the decision to create ASL.
Unlike its competitors in the United States, Russia, India, China and Japan, Arianepace depends on commercial launches, and not government contracts, for the lion’s share of its annual revenue. Because of that, the French government views a commercially successful Arianespace as necessary to preserving France’s, and Europe’s, autonomous access to space.
ASL is prime contractor for the new Ariane 6 rocket. A final disbursement of development funding by the 22-nation European Space Agency is planned following a Sept. 13 meeting to confirm ESA’s acceptance of ASL’s Ariane 6 contract proposal. ASL submitted its fully priced contract proposal in May. ESA and ASL began negotiations in June.
Airbus and Safran said ASL would total 8,400 employees including several hundred working for joint ventures and affiliates including APP, Arianespace, Cilas, Eurockot [a German-Russian small-satellite launch service provider], Eurocryospace, Europropulsion, Nucledudes, Pyroalliance, Regulus, Sodern and Starsem [which commercializes launches from Russia’s Baikonur spaceport of Russian Soyuz rockets].
More than 80 percent of ASL’s work force is in France, with most of the rest in Germany.
ASL Chief Executive Alain Charmeau said the company expects to generate around 2.5 billion euros in revenue in 2016, half of it from military contracts including Airbus’s work on France’s M51 strategic missile.
French Defense Minister Jean-Yves Le Drian told the Coface briefing that ASL’s creation, in addition to its importance to France’s access to space, is also “an issue of sovereignty relating to France’s strategic deterrent.”
As if to punctuate the statement, the Defense Ministry on July 1 made its latest test firing of the M51 missile from a French submarine off the cost of northwest France. France’s defense-procurement agency, DGA, said the test was successful, with the missile’s trajectory followed by France’s Monge tracking ship, which is also used to follow objects in low Earth orbit.