Newly formed tri-national European space champion Astrium is gearing up to mount a major challenge to its larger US rivals

Andrew Doyle/MUNICH

The creation of Astrium through the merger of Matra Marconi Space (MMS) with the space businesses of DaimlerChrysler Aerospace (Dasa) brings with it the promise of a much-needed competitive boost for Europe's space industry.

Shareholders European Aeronautic Defence and Space (EADS) (75%) and BAE Systems (25%) hope the move will establish a solid foundation upon which the new company can build the continent's challenge to the market domination of its US rivals, Boeing and Lockheed Martin. For now, however, the bulk of its business remains rooted to its home markets in France, Germany and the UK.

"To compete in this world you have to have size and even now, with annual sales of more than €2 billion ($1.9 billion) , we are only a third of the size of (the space divisions of) Boeing or Lockheed Martin," says Astrium.

Viewing itself as the emerging "centre of gravity" of Europe's space industry, Astrium is looking to bolster its position through acquisitions and partnerships while capitalising on the significant market opportunities presented by the merger. "We are open to new partners in Europe and the USA - we don't think the Astrium story is finished," it says.

Italy's Alenia Spazio says its intends to join the new company, although a final decision has yet to be made. "If the Italians join, it will not be before the beginning of next year," says Astrium. There are no plans for jobs cuts as a result of the merger, because there is little overlap between the companies. "Most of the business areas are complementary," says Astrium.

The company is recruiting in the UK and France, and to a lesser extent in Germany. "There are opportunities to put work into Germany," says Astrium. "What we can't afford to do is lose the expertise that exists in the current workforce." About 200 new staff are expected to be taken on in the UK this year, plus 150 in France. The company acknowledges: "Obviously there are going to be cultural challenges, but we know where they are."

Principal markets

Astrium's principal markets are science and Earth observation, military observation and communications, telecommunications and ground systems, launchers and orbital infrastructure. The company would have had proforma sales of €2 billion in 1999, employing 7,500 staff in France, Germany and the UK.

Astrium's space infrastructure business is dominated by participation in the International Space Station (ISS), for which it is the main European industrial partner, and the Arianespace launchers.

The company has a €2.3 billion contract from the European Space Agency (ESA) to lead the development, integration and operation for 12 years of the ISS Columbus research laboratory, which is due to be completed in 2003 and launched the following year. "We have the strength and financial power to go for such a contract," says Astrium, adding that the merged company is big enough to absorb the huge potential risks associated with the fixed-price Columbus contract.

Astrium has more than 50%of the European workshare in the ISS thanks to significant chunks of state funding provided by the French and German governments.

Astrium is developing major parts of the ISS unmanned transportation system (ATV) for ESA, together with prime contractor EADS. The ATVs will be launched by Ariane 5 rockets from 2004 and dock automatically with the ISS, re-supplying the station with experiments, spare parts and logistic items and disposing of waste. Its first contribution to the ISS was to deliver the data management system (DMS-R) for the Russian Zvezda service module which, as Flight International went to press, was due to be launched on 12 July.

Astrium says its competitiveness in orbital infrastructure activities has been boosted "an enormous amount" because previously, MMS and "Dasa space" were pitched against each other. "We have synergies, and now we can internally optimise the process of bidding in terms of prices and services," says the company.

It claims that the merger will bring in more work and that therefore staff cuts in this sector seem unlikely. "By realising these synergies, we become more competitive - and that means more contracts and not less people," says Astrium. It also believes that the merger will result in better value for governments in the projects they fund, such as the ISS.

The second major business area in space infrastructure is propulsion systems for launchers and satellites, mainly commercial.

The focus is Astrium's role as the biggest single external supplier to Arianespace for its Ariane 4 and 5 booster programmes, with EADS and Astrium together accounting for more than three-quarters of the industrial workshare on these projects. Astrium is also the biggest single industrial shareholder in Arianespace with a 16% stake. EADS has 27%.

For the flagship Ariane 5, Astrium has responsibility for the second stage, including the engine, vehicle equipment bay and panel structures - work which had previously been split between Dasa and MMS.

A new cryogenic upper stage engine is being developed and will increase Ariane 5's payload capability from 5.9t to 11t. It will be re-ignitable to allow constellation satellites to be placed in different orbits during the same mission.

Astrium's space infrastructure division also has a joint venture with Russia's Khrunichev Research and Space Centre - Eurockot Launch Services - which will deliver payloads of up to two tonnes into orbit. A commercial verification flight was successfully completed in May.

Earth observation

The Earth observation and science activities of the merger partners are being consolidated, with the key aim of increasing the commercial exploitation of technologies developed with the financial backing of European governments. ESA and the national space agencies are the main customers of this division, accounting for 70% of total business, and Astrium is the lead industrial partner on all of ESA's earth observation projects.

"These budgets are standing still or they will maybe decline - there is nothing to suggest that they will increase in the coming years," says Astrium. "We have to look for commercial opportunities, and find out the best way to trigger that market." The company predicts growing demand for Earth observation data from commercial customers, which it says can be satisfied by utilising available capacity on existing and planned satellite constellations.

The merger of MMS and Dasa space has again boosted the profit potential of the this sector, according to Astrium. "Before, we were smaller companies competing for contracts, but without having the money to invest in them," it says. "Now we have the power to invest money for the commercial markets."

Three of Astrium's "Spot" series of low Earth orbit optical observation satellites are in operational use, providing customers with images of "virtually any point on the globe with a 10m (33ft) resolution". Data from the satellites is marketed and sold by the Spot Image company, which is part-owned by Astrium.

It is also the prime contractor for ESA's two European Remote Sensing radar satellites, ERS-1 and ERS-2. These are able to provide images at night or during adverse weather conditions using their synthetic aperture radars.

The follow-up to ERS will be the ENVISAT scientific programme, due to be launched next year. "With its 10 newly developed instruments, ENVISAT will deliver data on the complex parameters of the atmosphere, oceans, polar ice caps and land masses," says Astrium.

The European concern will supply the advanced synthetic aperture radar, ozone mapping instrumentation, advanced visible/infra-red radiometer, high-performance infrared spectrometer and scanning imaging spectrometer. The data is expected to be particularly attractive to commercial users for use in cartography work, land-use mapping and infrastructure planning.

With ENVISAT, "we are looking for high-resolution data with a ground resolution of 1m", says the company. This compares with the 30m resolution offered by ERS-1 and -2.

However, the drive to exploit the commercial market for observation data could take a quantum leap forward if Astrium succeeds in establishing InfoTerra, a planned spin-off company backed by a combination of public and private funding. It would offer the proposed TerraSAR high-resolution synthetic aperture radar land-monitoring system, providing "data and geo-information services of unprecedented quality", says Astrium. "It will generate advanced information products and market them to private users, such as the agricultural community and mining companies, as well as institutional organisations."

Current planning calls for InfoTerra to be set up later this year and the TerraSAR to be fielded in 2003. Two satellites would be placed into orbit - the first operating in the L-band and the second in the X-band.

"We are at the preliminary stage, supported by the UK and German governments, and looking for a public/private funding approach," says Astrium. "We will invest money into the programme and are looking for other partners."

Astrium considers radar-based imaging, as opposed to optical technology, to be essential for the European, South American, South-East Asian and Japanese markets, where many areas are obscured by cloud for much of the year.

Governments are likely to be the first customers for TerraSAR, which could be used for a range of tasks such as ensuring farms keep to European Union directives, monitoring storm damage to forests to verify insurance claims, and observing the compliance of nations with the Kyoto agreements on pollution control.

The technology is also likely to have military applications, for example where NATO or United Nations verification of the movements of ground forces is required.

Whereas France, Spain and Italy have the jointly-funded, Astrium-led Helios optical military satellite system, the UK and Germany have no such capability and are looking at radar-based solutions. The German study is known as SAR-Lupe, and Astrium hopes to be selected as the prime contractor. "We have conducted substantial preliminary work in the field of satellite-based imaging reconnaissance for the German government," says Astrium. "Global weather-independent observation will be implemented by means of the SAR-Lupe autonomous radar small-satellite system."

On the scientific side, at the Farnborough air show Astrium will be heavily promoting its selection as the prime contractor for the ESA-led Mars Express programme. The contract covers the design and development of the first European spacecraft to visit Mars, scheduled for launch in 2003.

A UK-funded lander, Beagle 2, will carry instruments to analyse Martian rock, soil and atmosphere in an effort to find evidence of life on the planet. An Astrium-built stereo camera will also be installed.

Other major projects include the Rosetta mission, due for launch on an Ariane 5 in 2003 and travel through deep space for eight years before reaching its target, comet Wirtanen, in 2011. A small lander will analyse the comet's chemical composition.

Prime contractor

Astrium is also prime contractor for the four Cluster-II spacecraft - the first two of which were due to be launched on 15 July - which are designed to explore the interaction between the sun and the Earth's magnetosphere. The original cluster mission was lost in the failure of the first Ariane 5 test flight in 1996.

The largest European research satellite to date, the XXM X-ray satellite, was developed and built under the industrial leadership of Astrium and was launched in December 1999. It is monitoring X-rays emitted by celestial sources such as exploding stars and pulsars.

Astrium offers spacecraft for telecommunications missions ranging from broadcast TV and business communications to mobile systems and secure military applications. It also provides associated in-orbit operational services and ground control and communications networks. The lynchpin of this sector is the Eurostar series of communications satellites, with 18 of the latest version already in orbit from a total orderbook of 30.

With six major satellite orders during the first six months of this year, business is picking up following the relative slump experienced in 1998-99. "It's a very encouraging sign that we have had a good start to 2000," says Astrium. "It is very important to start a merger on an ascending trend and we are on an ascending trend."

Recent contracts cover three Inmarsat-4 satellites for the organisation's mobile data system, plus the Hot Bird 7 deal announced at the recent Berlin air show. Intelsat, meanwhile, has ordered two more satellites for delivery in 2002.

The merger of MMS and Dasa space has brought under the same roof business units that had been external subcontractors on various projects. The focus is now on achieving savings where these businesses can bring their expertise to other parts of the Astrium system. "There are a lot of synergies we can deliver," it says.

One of the most important future projects for Astrium is the planned Galileo satellite navigation constellation, with the company hoping to take a leading role in its design and development, and its operation and servicing. An industrial joint venture between Astrium, Alcatel and Alenia has been formed for the European Commission (EC) and ESA-backed project.

The EC is in charge of the overall architecture, while ESAhas responsibility for the definition of the space and ground segments. Definition studies are due to be completed by year-end, when the EC will decide on its launch. The Galileo constellation is expected to comprise at least 24 satellites in medium Earth orbit, with others in a geostationary orbit. It is due to become operational by 2005, building up to its full capability three years later.

Astrium, meanwhile, dominates the European military communications satellite sector. It is the prime contractor for the UK Ministry of Defence's Skynet 4 constellation.

The company is bidding for the prime contractorship of the next-generation Skynet 5, which is likely to be procured on the basis of a public/private sector funding partnership. "To compete for this contract, we've created a new company, called Paradigm Secure Communications, to provide secure communications and associated services," says Astrium.

France has similar plans for a next-generation military communications constellation and has awarded Astrium a study contract for its proposed Syracuse III programme. It is envisaged that the first satellite will be launched in 2003, with the rest following from 2007 onwards.

With a number of NATO communications satellites due for replacement, there have been discussions over rationalising these projects into a common, modularised programme.

"There is a new will to come to a kind of joint solution," says Astrium. "These projects may ultimately merge."

Source: Flight International