February 22, 2013
PARIS — After losing a bid to purchase the Italian aero-engine manufacturer Avio SpA to General Electric last year, French aircraft- and rocket-engine manufacturer Safran says it would consider a bid for the company’s space division should it come on the market.
“The Avio space business could be on the market in the short term, and that’s something that could also make some sense,” said Safran Group CEO Jean-Paul Herteman during a Feb. 21 conference call with investors, adding that Safran, through its Snecma motors division, has partnered with Avio on Europe’s Ariane family of rockets for the past 20 years. “There are some strong synergies and complementarities,” he said.
In December General Electric confirmed plans to purchase Avio from Cinven, a European private equity firm, and government-owned defense group Finmeccanica for €3.3 billion ($4.3 billion). However, GE does not intend to acquire Avio’s space business, which builds the solid strap-on boosters for the Ariane 5 heavy-lift rocket.
Safran and GE are strategic partners through the joint venture CFM International, which manufacturers the Leap and CFM56 aircraft engine series. Snecma and Avio are 50:50 shareholders of Paris-based Europropulsion, which develops and commercializes solid rocket motors for European launch vehicles, including the Ariane 5 and Italy’s new Vega light launcher, which made its successful first flight in February 2012.
Avio, whose space unit was worth €296.5 million in 2011 – up 3.8% over 2010 and representing 14.6% of Avio’s total business – is a 70% shareholder in ELV, the prime contractor for Vega. Italy’s ASI space agency owns the rest.
Safran had a banner year in 2012, reporting full-year revenue up 15.5% to €13.5 billion ($18 billion) over €11.7 billion in 2011 and €10.7 billion in 2010, with net income up 55%, from €644 million in 2011 to nearly €1 billion last year. New order intake totaled €18.1 billion and the company’s backlog grew to €48.5 billion compared to €43 billion in 2011.
Last April, Safran formed Herakles with the merger of two subsidiaries – energy materials specialist SNPE Materiaux Energetiques and solid-propulsion-motor manufacturer Snecma Propulsion Solid.
The linkup, which Herteman says was more than two decades in the making, secures Safran’s position as a leader in the area of solid propulsion technologies used to power ballistic missiles and launch vehicles.
Noting that rocket propulsion is considered a strategic asset for governments, Herteman said it is unclear whether Rome is keen to divest Avio’s space division, which stands to benefit from a decision made by the 20-nation European Space Agency last year to begin early design work on a mostly solid-rocket-fueled successor to the Ariane 5.