why the European champion is heckled in a space storm

© Airbus

– In the midst of designing innovative satellites, Airbus must face unforeseen costs.

The horizon seemed bright for Airbus. While Boeing is embroiled in a scandal over the safety of its aircraft, the European champion is overwhelmed by orders. But in space, everything does not go so well. On Monday, June 24, Airbus recorded in its accounts a charge of 900 million euros over the first half of 2024 because of its space activities. In 2023, the manufacturer had already set aside 600 million euros due to its difficulties in manufacturing satellites. These astronomical sums caused the stock to skid on the stock market: on June 26, at 3:00 p.m., the stock fell by 4%.

So how can we explain this space storm? According to several experts, Airbus faces industrial problems on several major projects. Particularly on the OneSat telecommunications satellites and on the Galileo satellites, the “European GPS” which works in your smartphones. “Airbus must deliver innovative satellites. The company realizes that their design is more complex, more expensive and longer than expected. Hence the delays”explains Maxime Puteaux, sector expert at Euroconsult.

The satellite revolution costs Airbus more than expected

Initially expected for 2023, OneSat is presented as a technological breakthrough. “Today, the characteristics of satellites are rigid”, recalls Maxime Puteaux. These devices orbit the Earth for 15 years with well-defined power and coverage capabilities. Conversely, OneSat satellites could be “reprogrammable”. “We can adjust the power, concentrate it in one place and move it. For example, satellite operators will be able to follow a plane on its trajectory and provide it with connectivity. And even reallocate the signal elsewhere when passengers are sleeping and not using the connectionillustrates Maxime Puteaux. It’s very ambitious, but very complicated to do.”

When the program was presented in 2018, “there was a fanfare start”remembers an expert in the sector. “Then the pace of contracts calmed down.” Commercial disappointments to which must be added unforeseen costs. OneSat was imagined before the Covid-19 crisis, before the war between Russia and Ukraine, and before the inflationary crisis. “The closer we get to delivery, the further we move away from the dream”, testifies our source. Beyond inflation, Airbus now has to pay penalties to its customers because of delayed deliveries.

Airbus faces the huge constellation of SpaceX satellites

Alongside these industrial setbacks, Airbus is facing another reality: the market for geostationary satellites, the multi-tonne jewels that the European group manufactures, has shrunk significantly. “It’s been ten years since the geostationary market declined. Before, there were 20 to 25 satellites per year. Today, it’s more like 6”estimates our space sector connoisseur. A slowdown linked to the place taken by mini-satellite constellations, less expensive, which operate in low Earth orbit. According to the company Look Up Space, the bar of 10,000 active satellites was crossed in June: of these 10,000 satellites, two thirds (nearly 6,650 devices) belong to Starlink, the SpaceX constellation. “This adds pressure on the economic model of manufacturers”observes Maxime Puteaux.

Should we be worried about Airbus? For Renaud Kayanakis, telecommunications expert, Airbus geostationary satellites and Starlink type constellations will instead have to coexist. “Mini-satellites cost less but last much shorter. Their lifespan ranges from 3 to 5 years.he emphasizes. “Airbus is not in danger,” confirms Maxime Puteaux. “Not everything is going to go through Starlink. But we can clearly see that the world in which Airbus lived no longer exists.”

In this new world, “all strategic options” are under study at Airbus. The European group could be tempted, like its competitor Thales Alenia Space, to cut its workforce. Some observers also wonder if Airbus and Thales Alenia Space could not be tempted by a merger to create a European champion in the face of competition from Chinese and Indian players. But merging two European manufacturers represents a project even more difficult than space science…