By Robert Wall
Airbus Group NV and Safran SA said Monday they plan to shake up
Europe's space-launcher sector by joining forces in a bid to help
Europe cut the cost of its future rockets to remain
competitive.
The companies that cooperate on Europe's Ariane 5 space booster
will pool rocket-related work in France and Germany whose
governments are the largest financial contributors to European
space programs. Airbus, which builds the Ariane 5 and makes
satellites, would contribute its launcher building activities with
Safran adding its rocket engine operations, the companies said in a
statement.
Europe and the U.S. for years have struggled to reduce costs of
their primary rockets. The European Space Agency has provided aid
through a price support mechanism to Arianespace, the partnership
that conducts launches of the Ariane 5 and smaller rockets. The
Pentagon has relied on bulk purchases of Boeing Co. and Lockheed
Martin Corp. launchers to cut costs.
Cutting prices has become increasingly important in the face of
new competition. Airbus Chief Executive Tom Enders has warned the
cost of future rockets must come down so Europe can be competitive
against new entrants such as SpaceX, the business set up by Elon
Musk.
"It is new competitors in the United States, private
competitors, that very much raise the question of how we can be
competitive in the years ahead," Mr. Enders told shareholders last
month.
Mr. Enders said the restructuring required in space is similar
to what commercial airplane maker Airbus went through more than a
decade ago to respond to the merger of Boeing Co. and McDonnell
Douglas Corp. Airbus shed its unwieldy consortium structure and
began a process to integrate the business to be more competitive
against its U.S. rival.
"We are at a defining moment to drive change as we have to be
more agile, our products more affordable, and our structures more
integrated," Safran Chairman and Chief Executive Paul Herteman
said.
The merger of the rocket businesses would take place over time.
As a first step, Airbus and Safran said they would create a joint
company to handle ongoing activities in civil launchers. Industrial
activities assets would be integrated in the new business
later.
The plan still needs to be endorsed by government stakeholders.
The European Space Agency had no immediate comment.
The companies may not be going far enough, though. "There is
likely to be incremental improvements through a more transparent
relationship between the two and possible synergies in research and
development, but I doubt it will be enough to completely reshuffle
the cards in cards in Europe and boost its competitiveness," said
Antoine Gelain, who heads the aerospace and defense practice at
consultancy Candesic. "It is obviously a defensive deal by two
incumbent players who feel threatened."
Europe is embarking on building a new generation of rockets to
replace the current Ariane 5 with an enhanced version, the Ariane
5ME, and an eventual replacement called the Ariane 6. France and
Germany have sparred over the design of the future rocket.
"Our agreement with Safran is the starting point of an exciting
journey towards a more integrated, more efficient and hence more
profitable launcher business in Europe," Mr. Enders said in the
news release.
Ministers representing countries involved in the European Space
Agency are set to meet in November with future rocket plans on the
agenda.
Write to Robert Wall at robert.wall@wj.com
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