Astrium Weathers Weak U.S. Dollar

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  Space News Business

Astrium Weathers Weak U.S. Dollar

By PETER B. de SELDING
Space News Staff Writer
posted: 14 April 2008
11:42 am ET





Astrium Satellites has been able to remain competitive in the commercial telecommunications market despite a substantial exchange-rate handicap –
�its costs are in euros while sales are made mainly in U.S. dollars –
�by chipping away at its cost structure and improving its Eurostar satellite design, Astrium officials said.

 

Part of the proof of the success is visible in the company’s satellite integration facility here, where half a dozen telecommunications satellites are nearing completion. Others, in less-advanced stages of integration, are at Astrium’s British facilities, while two smaller telecommunications satellites are being made ready at the Indian Space Research Organis
ation’s Bangalore, India, facility.

 

“We have designed our Eurostar 3000 satellite platform to play to our strengths,” Christian Pietrowski, Astrium’s executive vice president for telecommunications satellites, said April 8. “We have been able to demonstrate our competitiveness for satellites at above 6 kilowatts. We are less competitive below that range.”

 

When Astrium refers to spacecraft power, it means the net power available to the satellite’s communications payload, not the gross kilowatt output of the satellite’s solar arrays.

For Astrium, the commercial success visible on the shop floor also highlights the problem in current launch-vehicle availability. Two of the satellites that have been completed, Telesat Canada’s Nimiq 4 and the Inmarsat 4 F3, are likely to remain here for several months following the March 15 failure of a Russian Proton-M rocket.

 

A Russian government-appointed board of inquiry is expected to release a failure-review report in the coming weeks, but it remains unclear how long the Proton will be grounded.

 

While Astrium’s corporate parent, EADS, continues to call for improved profitability, Astrium in recent months has proved its ability to win business that might seem beyond its reach with two large-satellite contracts.

 

Satellite-fleet operator Eutelsat of Paris selected Astrium to build an all-Ka-band, KaSat spacecraft. It will be the first time Astrium builds a satellite of this type, and the contract was won after a close competition with Space Systems/Loral of Palo Alto, Calif.

 

In a parallel competition, Loral was selected by ViaSat Corp. of Carlsbad, Calif., to build the
�ViaSat-1 satellite. ViaSat and Eutelsat have joined forces to deploy a consumer-broadband service in North America and Europe.

 

In an interview after the contract selection, Eutelsat Chief Executive Giuliano Berretta said he selected Astrium after being assured that the Astrium bid was no higher –
�in U.S. dollar terms –
�than Loral’s. Berretta said Eutelsat’s relationship with ViaSat gave him full transparency into the ViaSat-1 and KaSat bids.

 

ViaSat Chief Executive Mark Dankberg said ViaSat was close to selecting Astrium for ViaSat-1. Loral’s willingness to co-invest in the program and to lease a portion of the satellite for its 15-year life tipped the deal in Loral’s favor, he said.

 

Dankberg said “it was a pleasant surprise” that Astrium could go toe to toe with Loral despite the unfavorable currency exchange rate.

Pietrowski
�said Astrium’s Eurostar products have no more than 10 percent U.S.-built components, meaning the dollar-euro exchange is a constant source of difficulty for the company.

The second contract that Astrium won against expectations was to build the
�AM4 satellite owned by the Russian Satellite Communications Co. (RSCC) of Moscow. The contract, announced in March, was won despite competition from the heavily favored Thales Alenia Space of France and Italy.

 

Thales Alenia Space is investing in a joint Euro-Russian satellite line that will use components supplied by NPO-PM, the Krasnoyarsk-based company that is Russia’s biggest satellite builder. By incorporating NPO-PM components, Thales Alenia Space hopes to reduce it
s
�euro-dollar exchange-rate exposure. A related product line, also with NPO-PM, is being designed exclusively for the Russian market.

 

The RSCC announcement said Astrium is building AM4 with Khrunichev Space Center of Moscow, a major Russian rocket and space-infrastructure manufacturer that is trying to enter the satellite manufacturing business.

 

But RSCC said the AM4 will use an Astrium platform, and an Astrium electronics payload as well.

 

One industrial competitor to Astrium speculated that Astrium made
�a money-losing bid to establish a presence in the Russian market, which long has
been a Thales Alenia Space stronghold. Pietrowski denied this: “Anyone who knows our company knows that we are not in the business of making bids we know will not profit a profit.” But he conceded that for AM4, Khrunichev will not be providing much hardware.

Instead, he said, Khrunichev engineers will be sent to Astrium facilities to learn certain aspects of modern communications satellite manufacturing.

 

“We won this contract because we have a reputation for on-time delivery,” Pietrowski said. “We plan to expand our relationship with Khrunichev, but we are not going to give away the design secrets of our Eurostar platform. Companies that do that are in a battle they can’t win in the long run.”

Comments: pdeselding@gmail.com