EADS Space Exec Questions Benefit of Euro-Russian Launch Alliance

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  Space News Business

EADS Space Exec Questions Benefit of Euro-Russian Launch Alliance

By PETER B. de SELDING
Space News Staff Writer
posted: 23 January 2006
11:57 am ET


The president of Europe’s biggest space-hardware company said Europe’s politically backed alliance with Russia on future launch vehicles has shown no signs of delivering on its promise.

EADS Space President Francois Auque said European industry and government officials now question whether a partnership with Russia is possible given the strategic nature of rocket technology and the evolution of Russian space policy.

“There is lots of hesitation in Europe on this and I share the hesitation,” Auque said Jan. 20 during a briefing on EADS Space’s 2005 financial performance. “Before we jump into a long-term effort of this kind, we need to be sure it will be truly cooperative. If Russian authorities think this program is a way of having Europe finance Russia’s launcher sector, the response is: ‘Nyet.'”

Auque’s remarks echoed recent statements by officials from Safran Group’s Snecma, Europe’s biggest rocket-engine manufacturer.

European governments, spurred on by France, have agreed to finance the introduction of Russia’s Soyuz rocket at Europe’s equatorial space port in French Guiana. Launch-pad construction has begun and a first launch is scheduled for late 2008.

The Soyuz decision was portrayed as the first step in a long-term cooperative program on future rockets between Europe and Russia, with each financing its own work.

One French government official said the Euro-Russian effort will take time to grow, but stressed that Russian organizations appear to have understood that the program will not mean exporting European cash to Russia. “The change is there, we can see it,” this official said.

Auque also voiced doubts about the long-term future of the commercial launch backup agreement between Europe’s Arianespace consortium, in which EADS Space is the biggest industrial shareholder, and the Boeing-led Sea Launch LLC venture of Long Beach, Calif.

Sea Launch has introduced a second product offering, called Land Launch, which will operate from Russia’s Baikonur Cosmodrome in Kazakhstan and compete directly with Soyuz rockets operating from Europe’s space port. Sea Launch’s primary offering, meanwhile, the Russian- and Ukrainian-built Zenit 3SL rocket, competes with Europe’s Ariane 5 for the launch of large satellites.

“An alliance is a continuation of war, but by other means,” Auque said of the Arianespace-Sea Launch mutual-backup agreement. “But the fact is that for the past couple of years, we in Europe had to stabilize the Ariane 5 launch system. Until that was done, Arianespace could not meet its schedule commitments and so some business was given to Sea Launch. We have been happy to have them as a backup.”

EADS Space, which includes satellite builder EADS Astrium, Ariane 5 and French ballistic-missile prime contractor EADS Space Transportation, and military telecommunications satellite services supplier EADS Space Services, expects to post 2005 revenues of about 2.7 billion euros ($3.3 billion), about a 4-percent increase over 2004, Auque said.

The company is profitable and had back orders totaling 11 billion euros as of Dec. 31. Auque said that by 2007 or 2008 EADS Space will post profit margins, before interest and taxes, of 6 percent. “I’m not sure any other company in our line of work can say that,” Auque said.

EADS Space is a major shareholder in Europe’s Galileo satellite navigation project, and the company announced it would receive about 20 percent of a recently awarded 950 million-euro contract for the Galileo ground segment and first four satellites.

The 30-satellite Galileo project is billed as a privately run business, to be funded mainly by an industrial consortium that includes EADS Space. But for Auque, Galileo likely will become a mainly government-financed system to be managed much as a highway or other public-infrastructure project.

“The Galileo business is mainly one financed with European taxpayer money, with a little bit of private-sector investment,” Auque said, adding that even governments such as Germany, which had insisted on the commercial nature of Galileo, are having second thoughts.

“They continue to go to church, but they no longer have the faith,” Auque said of governments that financed Galileo on the assumption that the private sector would pay for most of it.

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