ArianeGroup Wants €210M Per Year More to Operate Ariane 6
A look at how we got into this mess
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ArianeGroup Wants €210M Per Year More to Operate Ariane 6
Airbus and Safran are asking the European public to increase its €140 million per year contribution to ArianeGroup for the operation of Ariane 6 to a staggering €350 million per year, which represents a 150% increase. The ask was first reported by La Tribune, who has multiple corroborating sources.
The requested increase is just the latest in a long line of cost overruns and development delays that reinforce how significant a failure the programme has been. Ariane 6 was supposed to be a low-cost launch vehicle that was cheap to develop and would act as a stopgap between an expendable present and a reusable future. Even once this boondoggle gets in the air, Europe will, if this increase is approved, be on the hook for another €1.8 billion over the next six years, and that’s not even including the cost of the minimum order amounts being imposed on European governments.
It's easy to forget how little time for due diligence there was when considering the current Ariane 6 design before it was approved. The design was dramatically presented on 16 June 2014 on the lawn of the French President's Élysée Palace in the company of the then-President François Hollande. Just a few months later, in December 2014, ESA agreed to fund the Ariane 6 concept, which Airbus Defence and Space and Safran had proposed.
At the time of the announcement of the Airbus/Safran submission, Airbus Group Chief Executive Tom Enders said that its proposal was "all about enhancing the competitiveness of our space launcher business going forward. Our agreement with Safran is the starting point of an exciting journey towards a more integrated, more efficient, and hence more profitable launcher business in Europe."
I think it's also important to remember ESA had been working on its own design for 18 months when Airbus and Safran decided to put on their show. The vehicle design featured two solid-fueled strap-on boosters that would have been virtually identical to the first and second stages of the rocket. A Vinci-powered liquid-fueled third stage would complete the rocket. The economies of scale involved in building so many identified solid-fueled stages was a key factor in its design as it would allow the rocket to reach the ESA-mandated price of €70 million per launch. If the designers had known they could blow past that launch price requirement and subsidize it to the tune of hundreds of millions of euros per year, you have to think the design would have looked slightly different. In fact, the designers did study alternative designs. It was concluded that with a €70 million launch cost and the added requirements of keeping development costs as low as possible and a service introduction of around 2020, the design as presented was the one and only option. If only they'd known that those requirements were all made up and didn't matter.
In an attempt to grasp how this disaster manifested over the last decade, I have plotted a timeline showing the programme’s slow and then more rapid decline into madness.
2014 - 2016
When Ariane 6 was initially approved, ESA banked on spending €3.215 billion (this figure didn’t include the launchpad, which had a valuation at the time of €600 million that was to be covered by CNES).
The initial plan had been for Airbus and Safran to contribute €400 million to the project, and under that agreement, the pair received the go-ahead to take on the project. However, by early April 2015, the pair claimed that they had never agreed to that sum. If you're wondering whether or not there were any early warning signs, this was certainly one. What came next sure appears to have been a coordinated effort to wrestle all control of the project from public institutions.
On 9 April 2015, the French Aerospace Industries Association claimed that Europe's rocket industry would not invest in Ariane 6 unless control of the vehicle's design, production, commercialization, and operations were removed from the hands of European public institutions and given to industry without reservation. What follows is a lot of quoted text, but I think it paints such a clear picture of the hubris that is at the core of why the Ariane 6 programme has been such a failure.
“It is said that industry needs to make a financial contribution," explained French Aerospace Industries Association president Marwan Lahoud. "We have said it’s possible we will contribute, but on condition that [development] not be conducted under the former system."
“We want responsibility for the design, the production, the commercialization, and operations to be in the hands of industry, and not in a sort of mixed-economy creation that borrows more from the United Nations than from what our competitors do.”
“Under these circumstances, and only under these circumstances, will there be a business case that allows us to invest and to defend before our boards of directors the fact that corporate cash needs to be spent.”
“If we remain in what might be called an arsenal approach – where a public agency holds our hand and says, ‘This is what you have to do,’ like the old days – we’d all have the pleasure of building a rocket that won’t be competitive. That’s not feasible,” said Lahoud.
In May 2015, Airbus and Safran were given the control they had been looking for and finally agreed to pay the €400 million. The total cost of Ariane 6 at that point, including the contribution from industry, had come down to €3 billion thanks to “cost-cutting.” This really does seem to have been wishful thinking. Although, even that figure is sneaky. Vega assumed some of the cost as the pair would jointly use the P120C booster. €225 million was set aside for that project in what would become the Vega C programme, a vehicle seemingly conceived for no other reason than to help reduce the cost of Ariane 6 on paper.
In August 2015, ESA signed a contract with Airbus Safran Launchers to develop Ariane 6. With the ink on the signatures still drying, an initial €680 million was released, with the remaining funds to be released following a final go-head in 2016. At the time, the contract was worth €2.4 billion. When the contract was signed, the maiden flight of Ariane 6 was scheduled for 2020, with the possibility of a late 2019 debut floated. There is no part of me that believes a late 2019 debut was ever possible. That may, however, just be the cynic in me.
In September 2016, ESA gave Airbus Safran Launchers, which had only officially been finalized in June 2016, the go-ahead for the development of Ariane 6. This meant that all remaining funds to be allocated were then transferred to a company that hadn't formally existed for more than a few months. Why on Earth weren't these funds unlocked progressively once Airbus Safran Launchers had hit specific milestones is a bit of a mystery to me. Well, technically, that’s not true. The company had to wait a few months until December for the €1.7 billion check. Now, I know that the argument here is yes, Airbus Safran Launchers was a brand-new company, but it was a partnership between two companies that had decades of experience. As someone who has been through a merger of two giant companies, I think I can safely say that starting from scratch may have been preferable.
2017 - 2018
At the time that the Ariane 6 was approved by ESA, the agency and European governments agreed to purchase a guaranteed five launches per year to support the endeavor. However, the agency was not to award any funding as a way to subsidize commercial launches aboard the vehicle. The company’s business case called for six commercial launches per year on top of the five guaranteed government launches to make the vehicle commercially viable. In April 2017, the European Commission agreed to the minimum purchase terms. What's interesting here is that the European Commission initially stated that its own procurement rules did not allow for guaranteeing a specific number of launches.
In May 2017, Airbus Safran Launchers announced that it would change its name to ArianeGroup. It’s not really relevant to the story, but I included it so that I didn’t have to write Airbus Safran Launchers out again.
In September 2017, ESA signed up as the first customer for Ariane 6, securing a pair of Ariane 62 flights for four European Commission Galileo satellites. These missions were supposed to have been launched in late 2020 and early 2021. With the loss of Soyuz, they still have not been launched. The European Commission is now exploring the possibility of launching these satellites aboard SpaceX Falcon 9 flights.
In June 2018, the first hint of a delay was revealed. In an internal report, ESA assessed that “the accumulation of the most probable risks would lead to more than a year of delay for the first flight planned for July 2020.” However, when asked about the report, both ESA and ArianeGroup stated that the analysis was routine and that any potential issues with achieving the targeted launch date would be mitigated. This delay would finally be admitted by both parties in, as luck would have it, July 2020, when the launch of the maiden flight was supposed to be taking place. By then, however, a global pandemic had struck, gifting all involved a convenient excuse for the delayed flight, with operations at the Guiana Space Centre being shut down in March 2020.
By August 2018, there were indications that all was not well with Ariane 6’s commercial prospects. Then, ESA director of Space Transportation Daniel Neuenschwander was preparing to introduce cost-cutting measures in an attempt to make the vehicle more competitive. A satellite and launch industry consultant told SpaceNews at the time that "Ariane 6 is not going to come out as a final product, not in the sense that it won't be mature or reliable, but there is nothing Earth-shattering in it." ArianeGroup was exploring using Prometheus to lower the cost of the first stage and an upgraded upper stage constructed from cargo-fiber structures to reduce the cost of the rocket's second stage. Director of launch programs at ONERA's space division, Gérard Ordonneau, did, nonetheless, think that Ariane 6 had "a design to answer the question of cost reduction without reusability." I wonder if he knew that the answer was massive yearly subsidies.
In September 2018, Arianespace signed the first commercial contract for Ariane 6, with Eutelsat selecting the vehicle to launch five of its satellites. All five missions will likely be launched aboard Ariane 64 rockets. According to an Eutelsat spokesperson at the time, the company selected Ariane 6 as the deal came with "attractive terms." The spokesperson did, however, decline to comment on whether or not the company had received a discount on the launch price.
In November 2018, ArianeGroup announced that it would be reducing its headcount by 2,300 over the next four years. The cuts would reduce the company's 9,000 headcount by almost a quarter. The company said in a statement at the time that "the end of the development of Ariane 6 and the need to increase competitiveness in the European rocket launch business" resulted in the decision to reduce its numbers.
2019 - 2020
In January 2019, Arianespace CEO Stéphane Israël explained that the company had held off signing a manufacturing contract for the first 14 Ariane 6 rockets until European governments purchased four more flights aboard Ariane 6 for the 2020 to 2023 timeframe. At the time, only three had been purchased, two from the European Commission for launching Galileo and one from France for a military imaging satellite. It’s really hard to say if signing this contract any earlier would have made any difference. One would think that despite the vehicle still being under development, there were components that could have been produced and even raw materials that could have been secured early.
In March 2019, France's Court of Auditors sounded the alarm bells regarding the vehicle’s prospects. In a report entitled Space Transportation: A Strategic Ambition, a Priority for Reducing Costs, the state auditor explained that the “Ariane 6 launcher must evolve rapidly to remain competitive and ensure sovereign access to space.” The report stated that without this evolution, Europe risked the vehicle “not remaining competitively sustainable against American competition from SpaceX.” While ArianeGroup refused to comment on the report, they certainly would have liked its conclusions. "The financial effort that is necessary to develop Ariane 6 should mobilize the totality of European funds." At this point, it was clear that the development and operation of Ariane 6 would be anything but low-cost.
Staggeringly, at the same time this report came out, ArianeGroup was claiming that it was practically ready to begin combined testing. Julien Watelet, the then deputy head of media at ArianeGroup, explained that "the program is getting close to having all its propulsion qualified" and that "Vinci, the reignitable upper stage engine, finished qualification last October. Vulcain 2.1, the main stage cryogenic engine, is undergoing its second series of qualification tests, and will be qualified this year." He went on to conclude that "combined tests between the launcher and the launchpad will start from January 2020 in the French Guiana." Combined testing wouldn’t start until May 2021, and even then, it was only on the rocket’s fairings. The first and second stages of the rocket that are currently being used for combined testing only arrived in French Guiana in January 2022.
In April 2019, with ESA still unable to fill the mandatory minimum Ariane 6 orders, the agency's member states agreed to a workaround that would enable ArianeGroup to begin production despite not having the initial guaranteed orders. It’s not really clear what this workaround entailed. This was likely the first step towards the initial subsidy awarded to ArianeGroup in 2021 to operate Ariane 6. At the time, ESA director of space transportation, Daniel Neuenschwander, declined to comment on whether or not ESA would authorize subsidies for Ariane 6, simply saying that the agency was exploring a "number of measures." He did, however, explain that the decision would depend on whether or not European governments filled those guaranteed minimum orders.
“If seven launch service contracts are not signed by the ministerial at the end of November, then the ESA DG [at the time it was Jan Woerner] will propose for decision to member states to complement the revenues needed for the first Ariane 64,” said Neuenschwander.
In May 2019, ArianeGroup announced that it had started production on the first fourteen Ariane 6 launchers. Then-president of ArianeGroup André-Hubert Roussel bragged at how significant an accomplishment this milestone was for the company.
“Less than four years after signing the development contract with ESA, in August 2015, launching production of the first serial batch of Ariane 6 is a real success for the entire European industry,” said Roussel. It’s really unclear in what state those fourteen launchers are more than four years after the company claimed it had started building them.
In October 2019, as the agency prepared for the 2019 ESA Ministerial Council meeting in Seville, Spain, Director General Jan Woerner began laying the groundwork for the approval of that yearly subsidy for Ariane 6.
"The idea was and is that Ariane 6 would be 50% cheaper than Ariane 5. When this decision was made, this 50% decrease would have been an excellent position in the international launcher market," he explained. "Now what we see is that the market is further developing with lower prices, and this is, of course, a challenge for us. So, therefore, we have to see what we can do to prepare for a future with cheaper launchers or whether we need some support for Vega and Ariane 6 to be competitive."
Before we get to the subsidy, however, do you remember that €400 million ArianeGroup agreed to contribute to the development of Ariane 6 back in 2015? Well, despite the company being the joint venture of two of the continent's largest aerospace companies and it earning €2.7 billion in revenue in 2020 alone, in January 2020, the EU gave the company a €100 million loan to help it pay for its share of the development costs of Ariane 6. Whoever is doing lobbying for ArianeGroup needs a raise.
In July 2020, we finally got some truth. After continuing to state that a maiden flight in 2020 was possible even though it couldn’t possibly have been, ESA finally confirmed that the maiden flight of Ariane 6 would slip to 2021. That was just the start of the landslide of delays that would follow.
In October 2020, the slippage continued, with the flight pushed into the second quarter of 2022. That’s right, just three months had passed, and the debut of Ariane 6 has slipped another year. At the same time this particular slip was announced, ESA was asking member states for an additional €230 million for Ariane 6. The increase would have taken the total development cost of Ariane 6 to €3.8 billion. In December 2020, ESA confirmed that it had secured €218 million more for Ariane 6. According to Neuenschwander, one-third of that came from other programmes, which he declined to identify. So, now we’re snaking funding from other programmes to fund Ariane 6. France chipped in €102 million, while Germany contributed the other €54 million.
2021 - present
In July 2021, the first direct yearly subsidy for ArianeGroup was approved. At the request of ESA, France and Germany approved funding for Ariane 6 to the tune of €140 million per year for six years in an attempt to make the vehicle more competitive in the market. That’s €840 million more.
By September 2021, the company appears to have shed 1,000 employees, with reports claiming ArianeGroup was 8,000 strong. At the time, the company announced that it planned to shed an additional 600 jobs across its locations in Germany and France. According to the Safran website, ArianeGroup currently employs 7,600 people, seemingly indicating that it hasn’t yet met any of its targets to reduce its workforce.
On June 13, during a BBC interview, Director General Josef Aschbacher announced that Ariane 6 would not fly until "some time" in 2023. In October, the agency better defined this date, stating that the launch wouldn’t occur until late 2023.
At the 2022 ESA Ministerial meeting, another €600 million was allocated, this time for the Ariane 6 "transition programme," which is a nice way of saying ArianeGroup has spent all the money we’ve given them and needs more to get Ariane 6 to the launchpad.
Finally, in August 2023, ESA DG Aschbacher announced the most recent delay to the inaugural launch of Ariane 6 on LinkedIn, which is now targeted for 2024. This does, however, not take into account the most recent speed bump that has seen a halt to testing of the rocket’s core stage after an issue with the rocket’s thrust vector control system was discovered.
Conclusion
I have routinely said that Ariane 6 is not the destination but rather a mile-marker on the way to a reusable future that will be powered by programmes that are already in the process of maturing. Had Ariane 6 been introduced in 2020 as planned as a product that was able to compete without subsidies, I really do think that would have been true. We would have been in the third year of its operation in the middle of ramp-up operations. This would have freed up funding for what comes next.
The problem is that we’re now talking about an initial commercial flight in late 2024 or even early 2025 and €1.8 billion in subsidies and a 30-launch minimum order between 2025 and the end of 2030. That represents a significant investment. What could Isar Aerospace, Rocket Factory Augsburg, and Latitude do with €1.8 billion in funding split three ways over the same period?
There is very little we can do now. I know that. Ariane 6 is a pill that we’re just going to have to swallow. We cannot cancel the programme and any new development would take several years to mature. What we can do, however, is make sure that ArianeGroup is not involved in the future of European launch.
"What we can do, however, is make sure that ArianeGroup is not involved in the future of European launch."
Hear, hear!
As has become apparent the values and integrity of both private and state-backed space companies, that existed in the era of Aeropatiale, Matra, Dassaut, Safran, Thompson… have been swept aside, leaving free reign to financial shareholder interests (and eventual corruption) who now rely on misleading media coverage to cover their tracks. ESA and its member states have been obliged to bow to these new groups. As you say, we just have to swallow the pill, and forget our ideals. A great proportion of the « space fathers » must be heartily sick.