European Space Sees Year of Expansion Despite Economic Downturn

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  Space News Business

European Space Sees Year of Expansion Despite Economic Downturn

By PETER B. de SELDING
Space News Staff Writer
posted: 16 December 2008
02:39 pm ET






PARIS
— The biggest companies in
Europe
‘s space-hardware and space-services sectors reported across-the-board performance improvements in 2008, with most of them hoping the recent upward trend of the U.S. dollar relative to the euro continues.

On the government side, the 18 member governments of the European Space Agency (ESA) agreed in late November to a slight increase in spending in the next three to five years, an increase ESA officials viewed as a victory given
Europe
‘s current economic downturn.

The ESA spending, coupled with separate programs financed by other government entities in
, should be enough to protect the major contractors from the worst effects of the weak economy.

On the strength of its services arm, the Astrium space division of aerospace conglomerate EADS reported sharply higher pretax profit margins for the nine months ending Sept. 30, helped in part by that company’s purchase in July of the French government’s share of Spot Image, which markets Earth observation products.

EADS Chief Financial Officer Hans Peter Ring said in a Nov. 14 conference call that Astrium’s exposure to the commercial market, mainly through its Astrium Satellites’ division’s sales of commercial spacecraft, is limited.

On the launch vehicle side, Astrium and the Arianespace launch consortium are expected to sign an order for 35 Ariane 5 rockets in December or January following ESA’s funding of further work on a new upper-stage engine for Ariane 5.

While the new upper stage has not been approved, work on the Vinci restartable engine will provide sufficient work at Astrium and at the Snecma Motors division of Safran of Paris to keep their design bureaus from shedding staff, a fear that had complicated the negotiations on the 35-rocket order, Arianespace Chief Executive Jean-Yves Le Gall said.

Europe’s other principal space-hardware prime contractor, ThalesAlenia Space, is expecting to reach 2 billion euros ($2.54 billion) in revenue in
2008, a
17.5 percent increase on the strength of commercial and government satellite sales.

Thales
Alenia Space is prime contractor to the Globalstar mobile satellite services company for the 48 second-generation Globalstar satellites. ThalesAlenia Space Chief Executive ReynaldSeznec said in a Nov. 21 briefing that Milpitas, Calif.-based Globalstar continues to make regular payments on the contract. Seznec said he expects further growth in
2009, in
part due to Earth observation and telecommunications satellite programs being pursued by ESA.

The French government, which assumed the six-month rotating presidency of the 27-nation European Union in July, was partially successful in persuading other governments to invest in space-based security systems.

Italy
and
Germany
, along with
France
, agreed to contribute data from their military radar and optical reconnaissance satellite systems to the European Union (EU) for assessment of areas where EU troops are stationed.

In the latest addition to the list of nations building their own reconnaissance satellites,
Spain
in 2008 began work with Astrium Satellites on one radar and one optical Earth observation spacecraft.

Europe’s satellite-fleet operators, which historically have been among the world’s most profitable, continued to grow in 2008 on the strength of market takeup of high-definition television and the proliferation of regional and ethnic satellite-television stations.

Eutelsat
of Paris and SES of Luxembourg both said they expect continued growth, as did Hispasat of Spain and Telenor Satellite Broadcasting of Norway. These companies’ business models, with binding customer contracts lasting up to 15 years and consumers’ disinclination to repoint rooftop dish antennas to competitors’ satellites, have given satellite-fleet operators hope they can survive the recession relatively unscathed.

ESA governments agreed to spend nearly 10 billion euros at their Nov. 26 ministerial conference, an event that occurs every three years. The science and robotic exploration program came away a clear winner, with the agency’s science budget funded by mandatory contributions from ESA governments based on economic output receiving an annual 3.5 percent increase for at least three years.

In addition, ESA agreed to increase the size of its Enhanced ExoMarslander-rover mission, now scheduled for a 2016 launch. The mission’s exact dimensions will depend on whether ESA finds the equivalent of around 200 million euros in mission backing outside
Europe
, notably in the
United States
and
Russia
.