- July 19, 2024
- Posted by: admin
- Category: Emilio Cozzi
There is an intention to withdraw from the consortium for a European Starlink and the plan of the two companies to merge their space programs. Discussions that Leonardo is not ignoring.
BY EMILIO COZZI
A tremor is shaking the balance of European space. It is too early to say that something has been disrupted, but the news that arrived between July 16 and 17 deserves attention because it involves two of the largest manufacturing companies in the sector and the most anticipated continental constellation, which is at risk even before being born.
Two scoops from the French La Tribune revealed that Airbus and Thales, through their subsidiaries Airbus Defence & Space and Thales Alenia Space, intend to withdraw from the SpaceRISE consortium, created to capture the Iris² market, the European Union’s new satellite connectivity constellation, the European answer to Starlink.
According to the French newspaper’s sources, the intention was expressed in a letter sent by the subsidiaries of the two space manufacturing giants to satellite operators (SES, Eutelsat, and Hispasat) proposing they withdraw from SpaceRISE (an acronym for Space consortium for a resilient, interconnected, and secure Europe, composed of Airbus Defence and Space, Eutelsat, Hispasat, SES, and Thales Alenia Space). The news fits into the broader picture of alliances and joint ventures that link the space giants of the Old Continent: according to the rumors made public by La Tribune, Airbus and Thales have initiated exploratory talks to study a merger of their space activities to counter the growing competition, primarily American, in the satellite segment.
Bigger to face the crisis
Let’s start with this last point.
Several times in recent months and years, Airbus CEO Guillaume Faury has lamented a crisis in the European satellite sector: on June 25, the company announced a provision of 900 million euros related to “some telecommunication, navigation, and observation space programs” with a negative impact on profit. Thales Alenia Space announced a relocation of 1,300 employees due to the structural decline in demand for telecommunications satellites.
The situation is different for Thales Alenia Space Italia, which is sailing in much better waters, thanks in particular to contracts from space agencies (ESA and NASA, for the Lunar Gateway environments), PNRR funds for the new Iride constellation, and private clients like the one for the construction of the new Axiom Space commercial station. The idea behind the ongoing discussions would be to create “critical mass” to be stronger in the market and to merge the extra-atmospheric activities of Airbus and Thales.
The space arms of the two companies are Airbus Defence and Space and Thales Alenia Space, a joint venture of Thales (67%) and Leonardo (33%). In turn, Thales participates, with reversed percentages in favor of Leonardo, in Telespazio, which manages satellites and ground infrastructures. Leonardo’s CEO, Roberto Cingolani, told Reuters that they are “working a lot with Thales and Airbus for new strategic visions in space.” La Tribune hypothesizes that a subject similar to the MBDA missile consortium, participated in by the two companies and BAE Systems, could be born. If it goes through – every attempt made so far, the most recent in 2019, has not succeeded – new balances in participations and new corporate structures are not excluded. There will still be the obstacle of the Antitrust, the European agency that monitors competition and prevents monopolies.
It will also be, and above all, a political game, given that the three companies, in addition to being strategic for Defense and national security, are publicly owned. Airbus by the French and German governments, Leonardo by the Italian government. It is in this context that the intention to abandon the consortium for the largest European space infrastructure ever conceived, Iris², should be framed.
A step back
It is a complex issue, primarily economic, and related to the business risk of an innovative infrastructure (and of an untested configuration). Part of the European Govsatcom program, Iris² – acronym for Infrastructure for resilience, interconnectivity, and security by satellite – is a multi-orbital constellation, consisting of dozens of low and medium orbit satellites, to ensure connectivity autonomy to European institutions, governments, and the Defense of the Union’s member states. Together, the constellation also comprises a commercial infrastructure, aimed at selling its services to private entities.
Some numbers: the European Union has estimated the cost of Iris² at around 6 billion euros and has allocated a total of 2.4 billion from 2023 to 2027; 750 million are the commitment of the European Space Agency, which is a partner in this venture. The rest is expected to be covered by the private sector that will build it. It is stated in the “Regulation establishing the Union program for secure connectivity for the period 2023-2027.” Essentially, whoever wins the contracts will finance the commercial infrastructure, as the satellites of the commercial part will be different from those for governmental use. The 2.4 billion euros allocated by the EU will cover the governmental infrastructure, of which the Union will remain the owner. The rest is business risk.
A risk that Airbus and Thales clearly consider excessive.
Services through the governmental infrastructure, which require high-security standards, will be free for institutions (and authorized entities). These entities will also be able to purchase, at market prices, connectivity services through the commercial infrastructure.
According to La Tribune, Airbus Defence & Space and Thales Alenia Space do not intend to withdraw entirely from the project, “in which they believe”; they want to stay on as suppliers within the Core Team, already formed by OHB, Deutsche Telekom, Orange, Telespazio, Hisdesat, and Thales, to participate in a strategic challenge with their top-level know-how. To do this, a “preliminary contractual phase of 12 months will be necessary to conduct ‘de-risking’ studies on technologies not yet mature for a constellation present in two orbits (low and medium), which is a world first.” After the delays already accumulated, it is very likely that the timelines will be extended further.
Iris² in limbo
After the formation of the SpaceRISE consortium in May 2023, the wait for an industrial proposal from the actors composing it has gradually lengthened. It was announced for March 2024; it is not excluded that different contributing factors, from the European elections in June to the postponement to the next legislature of the European space law (a measure that could have, conditionally speaking, changed the rules of the game), also expected (in vain) last spring, may have played a role.
It is, de facto, one of the largest space investments by the European Union and, strategically, the acquisition of an autonomy currently lacking to the Old Continent; in case of not-so-remote events, such as a war or a natural disaster that could disrupt the terrestrial antenna network, Iris² would allow continuity of connection primarily for entities that govern regions, states, and the Union itself.
The public’s needs, in this case, seem not to align with industrial ones. It is difficult to find reassurance in the words of Cingolani, moreover a former minister for ecological transition in the Draghi government: “We try not to do damage. The competition is global, and as Europeans, we must strengthen each other,” he said on the sidelines of the presentation of Leonardo’s 2024-2028 Industrial Plan in Montecitorio.
The hope, like that of the manager, is that the ongoing discussions will stimulate new space strategies and strengthen Europe even beyond the atmosphere. It would be needed.