Agreement aimed at improving efficiency and reducing costs could come in new year

Snecma and EADS are holding talks on merging their respective liquid and electric space-propulsion businesses in the hope of stemming losses from the near-collapse of the satellite market.

An agreement could come early next year, according to an industry source, who says a merger is seen as "essential" to improve efficiency and cut costs as the industry suffers one of its worst downturns in years.

"We're holding exploratory talks with Snecma concerning the creation of a joint space transport company," says EADS Space Transportation, which became prime contractor for the Ariane 5 launch system in 2003, again to improve the efficiency of the multinational Ariane programme.

The space transport units of EADS Space Transportation, in Ottobrun and Lampoldshausen, Germany, would combine with Snecma Moteurs' space propulsion activities in Vernon and Villaroche, France. Snecma builds the Vulcain and Vulcain 2 main engines and HM7-Bthird-stage engine for the Ariane 5 launcher, with EADS providing the thrust chamber for the Vulcain. The companies have combined sales of €400 million ($500 million) a year and employ 1,700.

"It was the obvious moment to start talks with Snecma," says EADS. "Restructuring the space propulsion sector would further strengthen Europe's position in the global market as well," it adds.

A decision on going ahead with the merger has to await a due diligence study and approval by the European Commission. "There is no guarantee this will go through," says EADS. "But clearly we must evaluate all of the options."



Source: Flight International