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In the heat of competition: Even as Airbus Safran claimed today that Ariane 6 will be price competitive with SpaceX’s Falcon 9, the company cannot begin work on the new rocket because of a turf war Arianespace and French tax collectors.
The tax issue is as follows:
Airbus and Safran had agreed that Safran would pay Airbus 800 million euros ($874 million) in cash, in addition to its rocket-engine manufacturing capability, to become a 50-50 ASL shareholder with Airbus. Airbus officials since the beginning of the year have been negotiating with French tax authorities to determine how to minimize the tax bite of the cash transfer, which industry officials could be as high as 500 million euros, leaving Airbus with a net of just 300 million euros.
Delays in the cash transfer have meant that ASL, which is expected to count 8,000 employees, has been operating with only around 400 employees. In addition, it has made it difficult for the initial ASL team to present a fixed-price Ariane 6 production proposal to the 22-nation European Space Agency, which is financing the majority of Ariane 6 development.
In addition, the merger is being reviewed by the European Commission, part of the European Union.
The commission is looking at whether Arianespace’s minority shareholders, who are Ariane 6 contractors, will be protected once Airbus Safran Launchers raises its Arianespace shareholding to 74 percent from today’s 39 percent. The commission is also reviewing concerns expressed by satellite builders that Airbus, which is a major manufacturer of commercial satellites, might give its own satellites preferential treatment in setting the Ariane 6 manufest.
Airbus Safran still insists they can get the new rocket launched by 2020, but somehow that doesn’t seem reasonable to me, especially because I expect the French and European government authorities here to carve out their piece of the action, thus making it harder for the private company to deliver on time.