Jean-Yves Le Gall, Chairman and CEO, Arianespace
Arianespace is one of the leading players in the launch services arena offering customers a variety of launch vehicles and options and also has signed a number of deals in 2007, including being one of the main beneficiaries of SES Global’s plans to secure long-term access to space. Chairman and CEO Jean-Yves Le Gall talks to Via Satellite Associate Editor Mark Holmes about the current state of the launch services market and why Arianespace is positioned better than most of its competitors.
Via Satellite: How would you assess the launch services market over the last year?
Le Gall: Overall, I have been pleased with our reactivity to changes in the launch services market. The last year has been a bit unusual. In addition to the foreseen launches on our manifest, at the last minute we were asked to accommodate a number of orphaned payloads. Of course, we obliged, and on August 14 we were able to launch the first of these — Spaceway 3 — only six short months after the contract was signed. I was extremely pleased with how our team was able to pull together and bring this mission to fruition, under the pressure of an immediate deadline. I think that only Arianespace, with our dual launch system and large volume of business, could have accommodated such a contract.
Via Satellite: How many contracts are you looking to win in 2007? Do you expect the number of contracts available to increase in 2008?
Le Gall: I will be very pleased if we can sign more than 12 — the number we signed last year. That said, as it stands, our order book is already at more than 40 satellites to be launched, which is a record, and twice that of any of our competitors. As well, we’ve launched 10 satellites in the last eight months, a launch tempo that is unmatched in the industry. I don’t have a crystal ball, but demand for new satellites has rebounded and stabilized to approximately 25 orders per year for the foreseeable future.
Via Satellite: What is the significance of having a number of new Soyuz and Ariane 5 launchers at your disposal?
Le Gall: Arianespace signed a preliminary order for the production of 35 new Ariane 5 launchers and it confirmed a contract with the Russian space industry for acquisition of first four Soyuz vehicles to be launched from Guiana Space Center. This tells our customers that when they sign a contract with us, they’re not just getting an empty promise: We actually have the wherewithal to launch their payloads.
Aside from the order we’ve placed for new Ariane 5 and Soyuz launchers, we’ve allocated, alongside the European Space Agency, $400 million for the Soyuz launch system at the Guiana Space Center. The launch complex is really taking shape as the launch control center and vehicle assembly buildings are now rising out of the jungle. It is a visible token that our spaceport in French Guiana is expanding to better suit the needs of satellite operators the world over.
Via Satellite: Is the company in a strong financial position?
Le Gall: Arianespace posted sales of 983 million euros ($1.4 billion) in 2006, generating net income of 6.3 million euros ($9.1 million). The company was in the black for the fourth year in a row. In the meantime, Europe has redoubled its commitment to launch services. I think we are in a solid financial position and should perform even better in 2007.
Via Satellite: How do you assess the dynamics of the FSS industry in recent times? Do you think the way FSS operators will do deals with launch service providers will change?
Le Gall: Both new and standard video applications continue to drive the FSS market forward. As high-definition televisions become cheaper, as consumer become hungrier for more bandwidth, you are going to see the need for greater capacity on very powerful satellites. Manifests are booked solid for the next two years. I think companies can read the writing on the wall and decide for themselves that multiple launch agreements make sense in both the near and long term. Putting the decision off can be hazardous to their respective business plans and jeopardize their ability to procure a launch within an ideal fiscal timeframe. Large operators who are trying to increase transponder utilization rates will have less fallow capacity in orbit which puts more pressure on their ability to launch new and replacement satellites on time. SES has secured a strategic advantage in this area and we expect other large operators may follow suit.
Via Satellite: Is there a danger from signing long-term contracts and committing that room on your manifest to a single operator?
Le Gall: By 2009 Arianespace will have the capacity to launch up to 16 satellites per year in dual-launch configuration plus the capability of Soyuz for additional payloads up to 3 metric tons. Multi-launch contracts have absolutely no impact on Arianespace or our relationships with other customers. We can provide schedule assurance to SES and other large operators who want to secure launch capacity over several years because we have invested in production capabilities, payload processing facilities and launch infrastructure.
Perhaps if you are only launching a handful of satellites a year it could be an issue but we view long-term contracts as valuable for us and for our customers. I am sure that they are the future of this business. In a world where manifests are very crowded, multi-launch agreements are the best guarantee for customers to get launch slots when they want with the launch services company they want. We see long-term contracts as the future.
Via Satellite: Do you think the launch services market can sustain a number of players?
Le Gall: The market we see today can sustain several players. Arianespace relishes competition and will always rise to the challenge of competing for launches. In the final analysis, satellite operators will be attracted to the companies with the best track record of delivering satellites on target and on time. You can only establish that record with a legacy of verifiable successes. A new entrant can’t inspire that sort of confidence over night.
Via Satellite: How big a competitive threat do you view launch service alternatives from China and India?
Le Gall: China is effectively banned from launching from launching U.S.-made commercial satellites because of the ITAR regulations. This is a long-term problem for them. They are effectively banned from the core of the market. I don’t see this political situation changing any time soon. China is working at the edges of the commercial market with so-called ITAR-free satellites and their indigenous DFH series of communications satellites, but it is limited to a small customer base.
The larger issue here is that for all the companies present on the commercial market they must sell much more than just launch vehicles. At Arianespace we are selling end-to-end launch service and solutions which provide features and capabilities well beyond the lift capability of the launch vehicle itself. Tailor-made contracts, financing terms, insurance, manifesting, satellite processing capability, the payload environment, mission assurance capability and many other features are all part of any real launch service package. New players on the market do not have this expertise. Even if the market suddenly became open tomorrow, it will take time before they have the same level of skill that companies such as us and our current competitors have developed over the last years.