Profile: Arianespace Regains Footing With Healthy Ariane 5, Funding

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  Space News Business

Profile: Arianespace Regains Footing With Healthy Ariane 5, Funding

By PETER B. de SELDING
Space News Staff Writer
posted: 15 May 2006
02:15 pm ET


Profile: Jean-Yves Le Gall

CEO, Arianespace

A fter spending three years on the defensive to preserve its customer base and stabilize its financial accounts, the Arianespace commercial-launch consortium says it is now ready to play offense.

In recent years the Evry, France-based company has been recovering from the December 2002 failure of the maiden flight of its Ariane 5 ECA vehicle. Since that disastrous beginning the company changed the vehicle’s design and conducted successful return-to-flight launches in 2005.

Financially unstable following the failure, the company has been awarded more than $1 billion over five years in European government aid to cover certain of its fixed costs and has reached financial equilibrium. It reported a slight profit in 2005.

Like its competitors, Arianespace also has benefited from some recent modest growth in the commercial launch market that resulted in an increase in average prices. A special dividend for Arianespace is the recent growth in demand for commercial telecommunications satellites weighing 3,000 kilograms or less, a satellite category the company is certain to target as it prepares to begin launching Russia’s Soyuz rocket from Europe’s Guiana Space Center in French Guiana starting in late 2008.

Arianespace Chief Executive Officer Jean-Yves Le Gall said one of his main concerns now is how to keep Ariane 5’s engineering cadre sharp despite the fact that design changes are over, at least for now. “Engineers like challenges. They tell me it’s always the same, producing the identical vehicle. I tell them there is also a sameness in their monthly paychecks.” Le Gall spoke with Space News staff writer Peter B. de Selding.

You have conducted just one launch this year, with a second scheduled for late May. How many will you complete in 2006 and 2007?

We expect to complete a total of six Ariane 5 launches in 2006, with five or six in 2007. As usual, much depends on when satellites arrive at the launch site. It’s not impossible for us to raise our cadence to seven Ariane 5’s per year starting in 2007. The plan is to have one vehicle ready in advance of each being prepared. By the end of 2006 we will put this plan into place, so seven launches in 2007 is possible — again, depending on when satellites arrive ready for launch. The goal is to conduct 18-20 Ariane 5 launches between 2006 and 2008.

The promise of Ariane 5 ECA was to be able to launch together the first two telecommunications satellites arriving at your launch site. Why do you still need to suffer delays to match spacecraft?

The current Ariane 5 ECA rocket has a launch capability of 9,200 kilograms including the satellite adaptor, meaning a total satellite capability of 8,300 kilograms. In one and one-half years we will have increased that capability to 9,600 kilograms of total mass, including 8,700 kilograms of satellites. When we talk about a 10,000-kilogram version, this is what we mean. This increased capability will enable us to adopt more systematically the policy of taking the first two satellites that are ready.

You spent three years modifying the Ariane 5 ECA vehicle after its December 2002 failure. Did you lose much business because you had to continue with the less-powerful Ariane 5G version?

There were contracts that we lost because the Ariane 5 ECA version was not ready. I know of two contracts we lost in 2005 because of this. But we are rebounding from that period now, and I would say that those competitors who hoped to deliver a knockout blow to us failed to do so during this difficult period. We are now back to reclaim our leadership position.

The U.S. government appears ready to approve a rocket-industry merger of Boeing and Lockheed Martin, for their Delta and Atlas vehicles. Will this affect the competitive landscape?

The United Launch Alliance between the two is mainly for the U.S. government market. Neither Delta nor Atlas has been very active commercially, so I am not sure what the consequence will be on the commercial market. It depends on whether the new company decides to make the commercial market a priority.

There is currently a bottleneck in the market, with satellite owners having trouble finding launch slots. What is the pricing environment now?

There have been substantial increases in prices for awhile now, and this is only natural. Customers understand we are selling a service, not just a launch vehicle. The fact is I would not know how to reduce prices from where we are now at Arianespace. For example, currently if we have the slightest doubt about a particular component, we change it. This has a cost.

You have an alliance with Sea Launch LLC, a Boeing affiliate that operates a Russian-Ukrainian vehicle. Is this alliance irrelevant now that the Ariane 5 ECA is fully operational?

That’s not our view. Customers tell us they like the fact that the alliance features a collaboration between two separate companies providing mutual backup in case something happens with one of their vehicles. I remain convinced that we will be signing contracts in the coming years that are won in part because of our alliance with Sea Launch.

The alliance is an option we propose to customers. It is not available to those who have not contracted for it. They cannot expect to fall back on us if they experience difficulties with the others.

You are commercializing Russia’s Soyuz rocket, Sea Launch the Russian-Ukrainian Zenit 3 vehicle, and Lockheed Martin’s International Launch Services markets the Russian Proton M. Are these three ventures with Russian manufacturers likely to end as Russia assumes responsibil ity for marketing and sales internationally?

The evidence suggests otherwise. Russia certainly has the wealth and talent to train a cadre of salespeople, but what I see is that so far they have not done this and it has been 15 years since the breakup of the Soviet Union. I think the Russians understand that they have won more business this way.

Your biggest competitor, the International Launch Services Proton-M rocket, recently suffered a failure. Is this an opportunity for Arianespace?

Launch failures are not good for the industry in general. In any case, I haven’t seen Proton signing many commercial contracts recently.

Orbital Sciences Corp.’s small commercial telecommunications satellite line is increasing its market share, and a Euro-Indian joint venture recently formed also is entering the market for satellites weighing less than 3,000 kilograms. Is this a phenomenon that will last?

It’s impossible to predict. I notice that none of the large-satellite manufacturers believe enough in the small-satellite market to invest in production lines to build these spacecraft. It is too early to say that small satellites will be one-third of the annual commercial satellite business in, say, five years.