Feature story

Feature story

Questions & Answers: Arianespace’s Stéphane Israël is interviewed by the French industrial magazine l’Usine Nouvelle

October 3, 2013

In the following interview with the French magazine l’Usine Nouvelle, Arianespace Chairman and CEO Stéphane Israël focuses on today’s launch services market and the company’s competitive advantages.  He outlines Arianespace’s strengths with the demonstrated reliability of its Ariane 5, Soyuz and Vega launcher family; reviews the business results in 2013, and discusses steps for further cost-competitiveness with the future Ariane 6 launch vehicle.

Question: Is Arianespace afraid of new competition from SpaceX?

Answer: Each new competitor is a challenge for Arianespace, and should encourage us to provide even better service to our customers. A few years ago we were worried by the Russian launcher Proton, since they were undercutting prices. We overcame that competition, and we will also overcome SpaceX. Arianespace has some major competitive advantages. With 57 successful Ariane 5 launches in a row, the European launcher is the most reliable in the world. Our second major advantage is availability. This is the 12th mission in a row where we've lifted off at the beginning of the launch window – a very telling indicator of quality. For our customers, Ariane 5 is, and will remain the surest way to get their payload into orbit on time.

Question: Is this competition already weighing against your business?

Answer: SpaceX has been marketing very actively in the Ariane 5 segment for about two years. But this "virtual" period is now drawing to a close. After several postponements, its new Falcon 9 v1.1 launcher flew a demonstration mission on September 29, sending a 500 kg payload into low Earth orbit. Nonetheless, it will now take several years for the Falcon 9 to really prove its reliability. From the standpoint of availability, the question now is whether SpaceX will be able to increase the launch rate as planned. From three launches announced for 2013, SpaceX says it will carry out 14 in 2014! Nobody in the history of space has been able to ramp-up operations that fast. Furthermore, SpaceX will have some hard decisions to make concerning priorities between its first government client, NASA, and its commercial customers.

Question: But SpaceX is less expensive, since a launch costs around 60 million dollars...

Answer: If we have to adapt pricing between large and small satellites at a given moment, we will consider this option according to competitive conditions at the time, just like we adapt to meet cost challenges. What is clear is that it will be hard for us to lower the cost of an upcoming launcher if we maintain the same industrial organization. It will be up to ESA to create the industrial conditions that will enable us to enhance our cost-competitiveness, and that's the challenge of Ariane 6. But we are not waiting, as shown by our efforts to sustainably enhance Ariane 5's competitiveness. For example, ESA, with the support of the French government, has decided to increase the size of Ariane 5's fairing, a change desired by Arianespace, and that will give our customers a wider range of launch solutions.

A major private satellite operator has criticized the Ariane 6 configuration, especially the lack of a modular design. Do you have to revamp the design and perhaps speed up the timetable?

Answer: ESA, the European Space Agency, listened to both government and commercial customers, and it will continue to do so. Arianespace is involved in the analyses under way, and I will share my vision of the market with both my shareholders and ESA, enabling them to refine this timetable if they want. As the head of Arianespace, I take into account the timetable that was approved and the decisions made at the Ministerial-level conference in Naples last year. Ariane 6 should hit the market at the beginning of the next decade, after the introduction of a "midlife evolution" version of Ariane 5 (Ariane 5 ME).

What is your current market share? How about your backlog of launch orders?

Answer: Arianespace has signed a record number of Ariane 5 contracts so far in 2013: we have already signed 12 contracts, and we were selected by Brazil for a government satellite. That represents more than one billion euros in sales and a 62% market share – a level we had not reached at this point of the year for more than 15 years. For our three launchers, our backlog of orders now amounts to over 4 billion euros and the outlook is good as well. Emerging countries are deploying satellite systems, like Azerbaijan and Qatar did this year. We also have a number of prospects in the small satellite segment, about 3 metric tons, which should become firm contracts.

Question: Are you planning new investments in Kourou?

Answer: Since last year, our main focus has been operating our family of three launchers: Ariane 5, Soyuz and Vega. This family allows us to launch any type of satellite into any orbit at any time. This means I have to be able to carry out as many launches as possible from the Guiana Space Center, which is really doing remarkable work. We have the backlog of orders needed to support an annual rate of six or seven Ariane 5 launches, three Soyuz launches and three Vega launches, on average. If we could reach that as our "cruising speed", that would be good. Investments of several million euros in our launch base may be necessary to increase our flexibility to deal with the contingencies that are inherent to our business, and to increase our satellite handling capacity. We also intend to shorten Soyuz and Vega launch campaigns, still undergoing a learning curve.

What requirements will be met by the order placed this summer with Astrium for an additional 18 Ariane 5 rockets?

Answer: Since my background is in industry, I know you shouldn't interrupt production lines. But above all, I'm starting to book orders for satellite launches that will exceed the current capacity of the 20 Ariane 5 launchers under production. The new order will enable us to gear up for the period 2017-19. The contract will be finalized in December, and will be worth more than 2 billion euros – a clear sign of our confidence in the future!

©2013 l'Usine Nouvelle

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