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Monday, 20 May, 2002, 14:24 GMT 15:24 UK
Arianespace fights to survive
Ariane 5, AFP
Ariane 5: Technical success, commercial failure?

Financial experts say Arianespace, the company that builds Europe's primary rocket series, is on the verge of bankruptcy and will need money from European governments to survive.

The Arianespace Board of Directors has announced that they ended 2001 with a loss of 193 million euros (122m) on sales of 807 million euros (509m).

Experts say the company's problems reflect a global downturn in the satellite launching market. Over the past three years, the price of launching a satellite into orbit has plummeted by 30%.

Arianespace is likely to approach the European Space Agency to ask member nations to make contributions to keep the company afloat until the market recovers.

Launcher downturn

Arianespace's poor results are due to a number of factors.

Some are down to Arianespace's response to the rapidly deteriorating commercial conditions in the global launch services marketplace and the fact that it is currently shifting its workload across from the established Ariane 4 vehicle to the newer, much bigger Ariane 5 model.

The latter is more expensive to launch and has experienced some teething problems. Last July, for example, on the launcher's 10th mission, an Ariane 5 put two satellites in the wrong orbit.

Operations were held up while the cause was investigated.

Arianespace Chairman and CEO Jean-Marie Luton has proposed an aggressive action plan that he hopes will allow a rapid return to the breakeven point in the company's operations.

Since the beginning of 2002, Arianespace has successfully carried out six launches in less than 100 days - including the Ariane 511 mission in February that marked a resumption of Ariane 5 launches.

This placed Europe's biggest and most expensive Earth-observation satellite, Envisat, into a polar orbit.

Independent facilities

With seven more Ariane flights scheduled for the remainder of this year, Arianespace is set to perform a total of 13 launches in 2002.

The problem is that the company's ability to launch its rockets has not been reflected in its balance sheet.

Satellite experts speculate that if a recovery does not happen relatively quickly then Arianespace may have to be reorganised.

Part of the problem for Arianespace is that it has to rely solely on the international launching market for its business. Its rivals, Boeing and Lockheed-Martin from the United States, have regular lucrative business from the US Defense Department.

European governments will face a dilemma in responding to Arianespace's problems.

They do not want to spend more money on the company but want to ensure that European nations have a way to gain access to space that is independent of the United States and Russia.

Arianespace was established in 1980 to market the Ariane series of rockets that had been designed and developed by the European Space Agency.


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