ARIANESPACE ROCKETS AHEAD OF US SATELLITE LAUNCHERS

ARIANESPACE ROCKETS AHEAD OF US SATELLITE LAUNCHERS

Backed by a winning record and, soon, a new-generation rocket, Europe's Arianespace is solidifying its lead in what used to be America's domain - boosting satellites into space.

The prospect of unhampered global telecommunication and dozens of new players in the marketplace for which space so far has had no commercial meaning, is making the company's outlook even brighter.It comes as no surprise, therefore, that Ralph-Werner Jaeger, senior vice president of Arianespace, is pleased with the developments, apparently unruffled even by a last-minute hitch in the deployment of Ariane 5, the latest of the company's delivery vehicles.

Ironically, he told The Journal of Commerce in an interview, "Arianespace benefited most from the deregulation of telecommunications" in the United States. "We are the child of deregulation," he said. "First it was the United States, now Japan and soon there will be many others," he said.

MEETING CUSTOMERS

Mr. Jaeger came to Geneva to attend Telecom 95, the telecommunication industry's extravagant fair held every four years. More than a 1,000 companies

from 58 countries are here to flash their latest products and sniff for business opportunities.

"Everybody I want to talk to is here," said the head of marketing of a small Australian telecom company. "It would take me a year to see as many of my customers and prospects as I do here in a week."

For Arianespace, telecommunications represents nearly 90 percent of its business. Of the 106 commercial satellites the company has launched since May 22, 1984, 84 were for telecommunications. The company now controls more than 55 percent of the market and has on its order book more launches than the rest of its competitors combined.

"At first we thought we would be good if we launched two times a year," Mr. Jaeger said. "We're now lifting 15 satellites per year in 10 to 12 launches."

ALWAYS COMMERCIAL

Set up as a joint stock company in 1980, Arianespace has 53 shareholders, the largest of which is the French space agency, CNES, which holds 34 percent. It started commercial operations from the very beginning, developing expertise that the U.S. competitors, who until recently were launching more military satellites than civilian ones, did not have.

"We are the only company that has been in commercial satellite launching business 15 years," Mr. Jaeger said. "We've been developing the market."

Its main U.S. competitors, Lockheed Martin Corp. and McDonnell Douglas Corp., have always had the attitude of a military contractor, rather than a commercial company, dipping freely into the Pentagon's deep pocket, one analyst said.

Although the development of Arianespace rockets is fully financed by the participating European governments, Mr. Jaeger said its launches are not being offered at a subsidized price. At any rate, he said, "it's difficult on either side to determine exactly what the costs are."

CHINA IN PURSUIT

China, with its Long March rocket, and Russia's Proton, are also aggressively pursuing the satellite launching market, undercutting both Arianespace and the U.S. rocket makers by as much as 50 percent.

"Of course we consider the Russians and the Chinese as competitors, but our customers are a very conservative bunch and they don't like to take undue risks," Mr. Jaeger said.

A failed launch "may cost $40 million in the loss of the rocket and another $40 million in the loss of the satellite, but that's often a very small portion of the actual losses," he said. What his company offers customers is a 94 percent reliability rate - or three failures out of 50 launches - bettered only by the record of McDonnell Douglas's "Delta" rocket, which has a 96 percent rate of reliability.

"From my perspective, Ariane, Atlas and Delta are the cream of the crop," said Bruce L. Crockett, president of Comsat Corp. "But we have used the Chinese Long March and (Russia's) Proton once," he said. "They are certainly not as good, but they are going to force the others to lower their prices." The Bethesda, Md.-based Comsat provides data, voice and video communication services between the United States and the rest of the world via the Intelsat satellite network.

ROCKET FLAWS

The fly in Arianespace's ointment is the continuing problem with its Ariane 5 rocket, the $7 billion launcher that the European governments have been working on since 1987. A software problem and a leaking seal in one of its engines has delayed test flights for months, pushing its commercial use well into 1997.

When ready, Ariane 5 will be capable of lifting two satellites weighing over 5,600 pounds each. But what Mr. Jaeger is most proud of is the built-in redundancy which, he said, will make the rocket 98.5 percent reliable. Arianespace will then guarantee delivery or relaunch at no extra cost.