The move is the first step towards consolidation after Airbus
Group's chief executive Tom Enders, speaking exclusively to Reuters
last month, called for a fundamental rethink of the complex way
Europe designs and builds launchers.
Executives discussed the new venture with French president Francois
Hollande, who called it a "major step" towards consolidation while
underscoring the importance of 16,000 Ariane jobs in France - a
number that many analysts expect to come under pressure as Europe
slashes the cost of space launches.
"The space sector is changing fast. That is why we need to do things
differently and alter the way we share our efforts and
responsibilities," Safran's chief executive, Jean-Paul Herteman,
said after the meeting at the French presidential palace, which was
also attended by senior French space agency officials.
"This is absolutely indispensable ... in order to complete
successfully the family of launchers for the future," he said.
Airbus and Safran shares were both up around 0.4 percent, while the
CAC40 index was down 0.2 percent.
Reuters reported the move towards closer industrial co-operation on
The companies said the joint-venture would combine Airbus Group's
launch systems with Safran's propulsion systems, but hinted at
broader integration of public and private activities in an effort to
duplicate the success of planemaker Airbus.
Europe's Ariane 5 space launcher dominates the market for large
commercial satellites but faces growing concerns over its future due
to competition from Space Exploration Technologies (SpaceX), run by
billionaire entrepreneur Elon Musk.
To respond to the threat, Airbus and Safran aim to lead a drive
towards an integrated European launch firm drawing on the lessons of
Airbus's planemaking unit, which was spurred into turning itself
from being a consortium into a single company by the merger of
transatlantic rivals Boeing and McDonnell Douglas in 1997.
"It is the same type of event, with competition pushing us to change
our configuration completely," said Airbus Group's chief strategy
and marketing officer, Marwan Lahoud.
The move was immediately backed by the world's third largest
satellite operator. "Simplifying the multiple layers of Europe's
space industry is going in the right direction," said Eutelsat
President Michel de Rosen.
"The arrival of ... SpaceX has caused an upheaval in the global
space industry," he told reporters.
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Europe aims to replace its Ariane 5 rocket launcher with an Ariane 6
by 2021, but is wrestling with complex structures behind the design,
manufacture and marketing of space launchers as well as strict
conditions on the national share of work.
Under the current system under the auspices of the European Space
Agency (ESA) national government space agencies such as CNES in
France and the DLR in Germany design launchers, and pass the designs
to Airbus Group to manufacture the product, which is then passed to
a third party, Arianespace, to market.
Arianespace is owned by various public and private interests across
10 different European countries, including Airbus with about 30
percent and Safran with 11 percent while CNES is the biggest
shareholder with nearly 35 percent.
Airbus and Safran said they would propose a common design for Ariane
6, on which there have been disagreements between France and
Germany, and speed an interim solution, Ariane 5 ME.
By seizing the industrial initiative, Enders and Safran's chief
executive Jean-Paul Herteman are effectively offering to lead
Europe's fightback against SpaceX but must also tackle sensitivities
among public bodies involved, observers said.
There have been differences with France's space agency over strategy
and the speed of the process, which gathered pace after last month's
Berlin Airshow, according to industry sources. But its most senior
official threw his weight behind the venture.
"It is Europe's response to SpaceX. It strengthens the future of
Ariane," Jean-Yves Le Gall, president of CNES, said after taking
part in Monday's talks.
(Additional reporting by Geert De Clercq, Cyril Altmeyer; Editing by
Louise Heavens and Greg Mahlich)
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