Airbus, Safran Create Joint Venture For Space Launchers

(RTTNews) - Airbus Group N.V. (EADSF.PK, EADSY.PK) and French aerospace and defense company Safran SA (0IU8.L, SAFRF.PK) have created a joint venture named Airbus Safran Launchers, the two companies said Wednesday. The companies expect the joint venture to boost competitiveness and ensure profitability of the European space launcher business amid growing international competition.

In June, Airbus and Safran said they have agreed to create a 50-50 joint venture, with a key role for each shareholder in their legacy activities, especially in France and Germany. The JV will combine the expertise in the launcher systems from Airbus as well as propulsion systems from Safran.

The companies said Wednesday that the JV, which will start operations on January 1, 2015, will have an initial workforce of about 450. The companies expect closing of the transaction to occur on December 31, 2014 after completion of final formalities.

Airbus Safran Launchers will maintain the outstanding level of quality and reliability of Ariane 5, while working on a new family of state-of-the-art space launchers, the two companies said.

The new company will bring together the expertise of both Airbus and Safran in space launchers at key Franco-German industrial sites. The JV's headquarters will be located in Issy-les-Moulineaux, near Paris.

Airbus and Safran noted that this first transaction follows the announcement in June 2014 by the two companies regarding their intention to pool their respective space launcher activities. In a second phase, all activities of Airbus and Safran dealing with space launchers will be in integrated in the joint venture.

Airbus and Safran welcomed the approval by the European Space Agency's or ESA Ministerial Conference on Tuesday for the development and production of a new Ariane 6 space launcher. The companies said they made a "far-reaching" industrial proposal for Ariane 6 and its endorsement was critical for the JV's creation.

Tom Enders, Chief Executive Officer of Airbus Group said, "If we want to successfully counter growing international competition and prevent the risk of Europe's space sector from being marginalized, a lot more has to be done. Therefore, we hope that this ESA Ministerial Conference serves as a catalyst to transform the way institutional space agencies operate and interface with industry in the future."

Airbus and Safran have said earlier that they plan to develop the Ariane 6 launcher in a jointly-agreed configuration, which will be able to fulfill missions as expressed by the European Space Agency or ESA, the National Space Agencies, Arianespace and satellite operators.

Europe plans to replace the Ariane 5 rocket launcher with a new Ariane 6 launcher by 2020. Both Airbus and Safran are leading contractors on the Ariane space launcher, manufactured by Airbus Defence & Space. Safran's Herakles space propulsion unit makes solid rocket motors.

Industrial groups in Europe have been clamoring for a change in Europe's public-private system of building rockets, after the launch of the low-cost Space Exploration Technologies or SpaceX in the U.S.

Currently, government agencies design the launchers, and the designs are handed over to Airbus for manufacturing. The product is given to a third party, Arianespace, for marketing.

Shares of Airbus are trading at 48.60 euros, down 0.07 euros or 0.15 percent on a volume of 918,963 shares. Safran's shares are trading at 52.70 euros, up 0.28 euros or 0.53 percent on a volume of 218,801 shares.