PARIS — The chief executive of launch service provider Arianespace on Oct. 21 said the company is likely to finish the year with revenue of 1.4 billion euros ($1.56 billion), slightly ahead of 2014, having conducted a record 12 launches.

In testimony to the French Senate’s economic affairs committee, Stephane Israel said Evry, France-based Arianespace has booked nearly 2 billion euros in new orders this year, bringing its backlog to more than 5 billion euros and maintaining its market share at 50 percent.

The backlog is composed of launch contracts for 21 Ariane 5 heavy-lift rocket missions, 21 medium-lift Soyuz launches — for startup OneWeb’s Internet constellation — and 10 orders for Vega light-lift rockets, including a commercial order from Google’s Skybox for its Earth imaging satellite constellation.

Israel said the health of Arianespace, coupled with the commitment of European governments, led by France, to inject some 800 million euros per year into the launcher sector through 2024, makes it a good time for Ariane 5’s work force to reduce costs.

The 800-million-euro commitment from member governments of the European Space Agency, made in December 2014, is divided into ongoing price supports and other financing of the Ariane 5 and current Vega rockets, and development of the new Ariane 6 and upgraded Vega C rockets to fly starting at the end of this decade.

To keep competitive with Hawthorne, California-based SpaceX’s Falcon 9 rocket and the future Falcon Heavy, Arianespace has reduced prices for lighter satellites occupying the lower berth on an Ariane 5. Heavier satellites, where Arianespace has faced less competition in recent years, are placed into the upper berth.

A corresponding reduction in Ariane 5 costs — rocket production, launch activities and ground network — is necessary to avoid having Arianespace’s financial accounts plunge again into the red, Israel said. The goal: a 5-6 percent cost reduction in total Ariane 5 costs by 2017.

In return for funding Ariane 6, European governments insisted that the annual price support payments they make to Arianespace to keep it from losing money — 100 million euros per year on average — cease once the new rocket is operational. A first launch is scheduled for 2020, with a three-year phase-out of Ariane 5 to follow.

Artist's concept of the Ariane 64. Credit: CNES
Artist’s concept of the Ariane 64. Credit: CNES
Artist’s concept of the Ariane 64. Credit: CNES

Europe’s rocket industry in turn has won greater autonomy in the operations and production of Ariane 6. Ariane 5 prime contractor Airbus Safran Launchers at the end of this year will purchase the 34.7 percent of Arianespace equity now owned by the French space agency, CNES.

European governments have agreed to guarantee Arianespace at least five Ariane 6 satellite launches per year, and three Vega C launches. Arianespace, Airbus Safran Launchers and the rest of the Ariane and Vega industrial team will then be on their own in the larger commercial market in terms of prices, profit and loss.

But some details remain to be worked out, especially who is responsible for the unforeseen spending that will accompany an Ariane 6 failure, investigation, down time and eventual return to flight.

“That is not entirely clear at this point,” Israel said.

SpaceX has made reuse of the Falcon 9 rocket’s first stage a high priority, a decision that Europe’s launch sector has not made.

Israel said Arianespace’s initial assessment is that a rocket would need to launch 30 times per year to close the business case for a reusable stage given the cost in energy of returning the stage, refurbishment and the fact that reuse means a smaller production run and thus higher per-unit costs.

“We will never be launching 30 times per year,” Israel said, and for now Arianespace is preserving all its rocket’s propellant to carry payloads into orbit, and none to return a stage or the engines.

In keeping with France’s Law on Space Operations, however, Arianespace will be forced to load the Ariane 6 cryogenic upper stage with sufficient fuel to complete its satellite delivery mission and then to lower its orbit to permit a controlled re-entry into the atmosphere.

The current Ariane 5 costs 150-170 million euros to build and launch. Ariane 6’s cost goal is 90 million euros, or $100.3 million at current exchange rates. It would be sold for $120 million per launch, with two satellite customers per launch of the heavier Ariane 64 version. A $60 million price per customer, Israel said, is close enough to what SpaceX charges today, although he said the company has shown it is able to price below that level.

While the Arianespace-SpaceX competition is a focus of the commercial satellite industry, the SpaceX-United Launch Alliance battle for U.S. Defense Department business is even fiercer. It is not just the volume of U.S. military orders that launch vehicles can expect or the higher prices that rockets can charge, it is also the way the U.S. military pays for its launches, Israel said. There is much more up-front cash compared with the commercial market.

Israel said he is not worried about India’s new geostationary launch vehicle for the moment beyond the fact that it will take away some Indian government business from Arianespace.

Similarly, he said China will not be a competitive threat to Arianespace so long as the U.S. government maintains its ban on the export to China of U.S.-built satellite parts. The ban, collectively known as the International Traffic in Arms Regulations, has kept out of Arianespace’s way a formidable competitor with a large domestic market, he said.

Peter B. de Selding was the Paris bureau chief for SpaceNews.