Arianespace Expects To Post 2011 Profit After 2 Years of Losses

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PARIS — The Arianespace commercial launch consortium expects to post a 10 percent increase in revenue for 2011 compared with 2010 and to report a slight profit for the year after two years of losses, the company’s chairman said Jan. 5.

Jean-Yves Le Gall told reporters here that the Evry, France-based company’s backlog now stands at a record 4.5 billion euros ($5.9 billion) for its heavy-lift Ariane 5 rocket and Russia’s medium-lift Soyuz vehicle.

Soyuz made its two first flights from Europe’s Guiana Space Center spaceport in French Guiana in 2011. Le Gall said three Soyuz launches are planned from the Guiana site in 2012, with two more launch campaigns to occur at Soyuz’s traditional home base, the Baikonur Cosmodrome in Kazakhstan.

In addition to the five Soyuz launches, Arianespace has scheduled seven launches of its heavy-lift Ariane 5 rocket, with the first to occur in March. That would compare with just five Ariane 5 launches in 2011.

Europe’s new Vega small-satellite launch vehicle is expected to make its inaugural flight from the Guiana Space Center in February. Operating three vehicles at the South American site, at an annual rate of six or seven Ariane 5 vehicles, two or three Soyuz campaigns and one or two Vega flights, will help Arianespace reduce its per-launch operating costs by spreading these charges over three vehicles rather than just the Ariane 5.

Helped by the two Soyuz campaigns, which occurred in October and December, Arianespace in 2011 apparently averted a third consecutive year of losses. Its financial accounts are not finalized until June, but Le Gall said the company expects to report a slight profit on about 985 million euros in revenue.

In 2010, Arianespace reported a loss of 83 million euros on revenue of 897 million euros.

Whether Arianespace can ever be profitable on a sustained basis without an overhaul and consolidation of its industrial contracting team, now spread over Europe to guarantee support of European governments, remains a topic of debate among European governments.

The 19-nation European Space Agency (ESA) in 2011 ordered an audit of Arianespace and its contractors as one of the conditions for injecting up to 240 million euros into Arianespace over two years.

The audit has not been made public, but European government and industry officials have said it concluded that very few savings could be squeezed out of the Ariane rocket production without wholesale restructuring.

Of the 240 million euros agreed to by ESA governments, ESA has agreed to release a total of some 217 million euros so far. About half of that sum will be allocated to Arianespace’s 2011 accounts, permitting the company to show a profit. The remaining funds will be allocated to the company’s 2012 financial year.

Whether to make permanent these annual payments to offset Arianespace’s fixed costs will be high on the agenda of ESA governments when they meet in November to set a multiyear budget and policy direction for ESA.

Some government officials have said Arianespace should be transformed into a government agency. Others suggest that ESA become a major Arianespace shareholder along side, or in the place of, the French space agency, CNES. Most other Arianespace shareholders are Ariane 5 contractors.

Le Gall said these ideas and others are still being discussed, but that the audit made clear that Arianespace was managing its finances efficiently. Arianespace and other European government officials have said they hope the audit will quiet critics who say Arianespace should be able to conduct its business without such substantial government support.

These critics have said they cannot understand why Arianespace cannot be profitable on its own given the health of its business. The telecommunications satellite market, which is Arianespace’s most important business, has not suffered from the near-global economic downturn. Commercial launch prices have been increasing and the Ariane 5 rocket has launched 46 times successfully since its last failure, in late 2002.

The audit, Le Gall said, should provide the answer: “It costs more to make rockets in Europe than it does in Russia or China,” he said.

Arianespace’s 4.5 billion euros in backlog includes 2.5 billion euros in orders for commercial launches aboard the Ariane 5, 1 billion euros for government launches aboard the Ariane 5, and 1 billion euros in back orders for Soyuz launches.

Arianespace is the only launch-services provider that publishes detailed financial data each year, making it difficult to compare its performance with counterparts in the United States, Russia, India and China.

 

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