Europe's Arianespace takes on SpaceX by cutting Ariane 5 rocket launch price

[January 28, 2019]  By Jamie Freed

SINGAPORE (Reuters) - Europe's Arianespace is discounting the price of satellite launches with its Ariane 5 rockets as it competes against U.S. rival SpaceX for customers before the release of the cheaper Ariane 6 rocket next year, a senior executive said on Wednesday.

Arianespace is aiming for the cost of launching the Ariane 6 to fall by around 40 percent versus the Ariane 5 through design changes and higher volume production, bringing its prices more in line with Elon Musk's SpaceX, Arianespace Managing Director and Head of Sales for Asia-Pacific Vivian Quenet said.

He said in current marketing campaigns, the company is offering customers such as telecoms an Ariane 5 launch for the same price as the Ariane 6.

"We have made a lot of effort on the sales price. When we do that, the result is very positive," Quenet told reporters on Wednesday, declining to discuss details of profitability.

Arianespace is competing for two major launch contracts in the Asia-Pacific region that should be awarded this year and expects there could be tenders for another three, he said.

Arianespace, majority-owned by a joint venture of Airbus <AIR.PA> and Safran <SAF.PA>, completed 11 launches with its Ariane 5, Vega and Soyuz rockets in 2018, in line with guidance that had been lowered mid-year from an initial 14.

The company, which has a mission of guaranteeing Europe independent access to space and is used by government and commercial clients, this month forecast up to 12 launches in 2019, with four of them targeted in the first quarter.

The Satellite Industry Association lobby group estimates the satellite launch services market is worth $5.5 billion a year. SpaceX has upended the industry with reusable rocket technology that has slashed the cost of space transportation.

A replica of the rocket Ariane 5 is seen at the entrance of the Guiana Space Centre in Kourou, French Guiana, October 17, 2011. REUTERS/Benoit Tessier

Another U.S. group, the United Launch Alliance joint venture between Boeing Co <BA.N> and Lockheed Martin Corp <LMT.N>, said last week it would conduct the final design review for its new flagship Vulcan rocket within months as it also looks to lower costs to better compete against SpaceX.

Amazon.com Inc <AMZN.O> founder Jeff Bezos' Blue Origin said this month it will fly its still-in-development New Glenn rocket in 2021 - the same year as Vulcan.

SpaceX, which media reports say is valued at $30.5 billion, said this month it would fire about 10 percent of its more than 6,000 employees, seeking to create a leaner company to deal with the "extraordinarily difficult" challenges of developing interplanetary spacecraft and a global space-based internet.

Arianespace's majority shareholder, ArianeGroup, announced on Tuesday it had signed a contract with the European Space Agency to study a mission to the moon before 2025 with the aim of mining regolith, an ore from which it is possible to extract water and oxygen.

Quenet said if the mission proceeded, it would be launched with the Ariane 6 at its facilities in French Guiana.

(Reporting by Jamie Freed; Editing by Muralikumar Anantharaman)

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