TAMPA, Fla. — Italian rocket maker Avio secured 340 million euros ($358 million) in government funding June 29 to develop launch vehicles for the next decade.

About two-thirds of the pandemic recovery stimulus funds from the Italian government will support a small, two-stage demonstration rocket that is slated to fly by 2026 with a new liquid oxygen and methane engine.

Avio is using the remaining 120 million euros to develop another liquid oxygen methane engine that CEO Giulio Ranzo says will be six-times more powerful. The company aims to qualify this engine via ground tests by 2026.

Both programs are leveraging Avio’s M10 liquid oxygen and methane engine prototype that it is currently testing for the upper stage of Vega E, a small launch rocket that is due to succeed Europe’s Vega C in the second half of this decade.

Vega C, which is counting down to its maiden flight around July 7, is slated to replace the retiring Vega rocket.

Vega E is currently on track to fly in 2026, and Ranzo said its development will run in parallel with work on its so-far unnamed demonstration rocket.

“With these two contracts we are preparing the ground for the launchers that will fly in the 2030s,” he told SpaceNews.

According to Ranzo, the demonstration rocket will have one-tenth of Vega E’s three-metric-ton payload capacity.

“What will follow beyond this prototype, I don’t know, we will see,” he said.

“On one side we will have this very small prototype and on the other side we will have a high thrust engine.”

He added: “By the middle of this decade we will have all the main technologies we need to come up with even better products beyond Vega E.”

Unlike Vega E, Avio’s upcoming demonstration launch vehicle will fully draw on liquid oxygen and methane propulsion. 

According to Ranzo, this propulsion’s comparatively cleaner combustion characteristics, compared to solid and other liquid-based alternatives previously used for Vega engines, potentially make them reusable.

SpaceX’s Starship and Blue Origin’s New Glenn rockets are also being designed to use liquid oxygen and methane engines.

The European Space Agency is the contracting authority for Avio’s new funding, which comes from the Italian government’s share of Europe’s Recovery Plan to support economies recovering from the pandemic.

“The main intent is to expand the breadth of technological capabilities of Italy,” Ranzo said.

Avio has unlocked an initial 11 million euros of the funding to cover early development work over the next few months.

The company plans to engage with startups and small to medium-sized businesses to accelerate its development.

Ranzo said Avio continues to “hire like crazy” after adding 150 employees since the beginning of the year, and now has more than 1,000 employees.

Avio is Vega’s prime contractor and is a subcontractor for the Ariane 6 launch vehicle that is in line to replace Europe’s heavy-lift Ariane 5 rocket.

Ranzo told SpaceNews in a recent interview how it has been expanding facilities to help Arianespace meet its share of a colossal launch deal for Amazon’s Project Kuiper megaconstellation.

Earlier this year, the Italian government also launched a billion-dollar project for an Earth-observation constellation that Avio expects will be launched by Vega C. 

Ranzo expects a prime contractor to build around 34 satellites for the network to be selected “soon” to meet an objective to get them in orbit by 2026. 

Jason Rainbow writes about satellite telecom, space finance and commercial markets for SpaceNews. He has spent more than a decade covering the global space industry as a business journalist. Previously, he was Group Editor-in-Chief for Finance Information...