Broader Implications of Airbus’ Struggling Space Business

Last week, Airbus announced it was taking a €900 million charge in its Space Systems business. This follows a €600M hit just four months before. What’s going on?

Airbus builds three types of satellites: comms, navigation, and EO. While the three product lines are all having problems, comms is its cornerstone – specifically, the OneSat software-defined satellite program.

The trend toward a more adaptable, reconfigurable, flexible platform like OneSat marks a strategic pivot in the sector as traditional GEOs get boxed out by Starlink. And, just last year, Viasat, the chief pioneer and advocate of multi-Tbps GEO satellites, canceled its Viasat-4 program. So, is it any wonder that software-defined is looking like GEO's new lifeline?

The problem is that software-defined satellites are still just mostly vapor.

Sure, Boeing managed to develop a software-defined payload funded by the DoD through the WGS program. But Maxar was too broke to bankroll one. Lockheed is overly focused on government missions and has retreated from the commercial market. Orbital Sciences was acquired by Northrop, and we don’t know what happened there.

Shifting to the win column: in 2015, the European Space Agency (ESA) and French space agency Centre National d'Études Spatiales (CNES) awarded Airbus (OneSat) and Thales Alenia Space (Space Inspire) a collective €227M through the ARTES program. The funds were to support their payload development efforts, with the goal of reducing satellite manufacturing costs by 30% while maintaining Europe’s commercial market share. This was a significant boost for Airbus and Thales Alenia Space, and things were looking up. ESA & CNES targeted 2019 for the first launch. 

After a slow start, Airbus eventually landed the first software-defined satellite order in 2019 (a three-satellite order from Inmarsat). A flurry of orders followed for both manufacturers. Between 2018 and 2022, software-defined satellites from Airbus and TAS swept up 11 of the 23 commercially competed satellite orders* — an impressive 47% win rate.

But while ESA & CNES hit their market share goals, the 30% cost reduction target, and promise of quick delivery times have proven more elusive. The OneSat program is now shaping up to be a billion-euro albatross for Airbus, and TAS is also showing signs of distress after announcing a 15% layoff for the space division in March.

More troubling for the industry, the order-to-orbit time for Airbus is now pushing to nine years or triple the average three-year delivery time of a production GEO model (note: before its most recent delay, Viasat was projecting a 2027 service entry for its first-in-line GX 7 satellite). 

But Viasat isn’t the only operator feeling the pain from software-defined satellite delays. In total, eight satellite operators have placed OneSat and Space Inspire orders with Airbus and TAS, including:

• Intelsat. Ordered two (2) OneSats and two (2) Space Inspires. This new capacity is desperately needed to woo IFC customers.

• Viasat. Three (3) Inmarsat F-7’s represent the company’s nextgen GX broadband service, replacing the I-5’s launched between 2013-2017.

• SES. Ordered two (2) Space Inspire satellites providing video and data coverage in the EMEA region.

• JSAT. Split orders for Airbus (Superbird 9) and TAS (JSAT 31), providing data and video capacity for Southeast Asia.

• Optus. Ordered one sorely needed satellite in 2020 that is optimistically two years late, prompting Optus and customers like Sky New Zealand to look for alternative satellites.

The lack of affordable and easy-to-produce – at least by spacecraft standards – software-defined satellites leaves GEO operators in a bind. LEO constellations, especially vertically integrated ones like Starlink and Kuiper, are exerting enormous market pressure on established operators. On a cost-per-bit basis, GEO can be competitive with LEO, but it’s hard to win business when assets are stuck on factory floors.

*Excludes small GEOs, radio, video, and C-band orders. Includes mixed-use satellites such as Arabsat 7A and Koreasat 6a.

SOURCE: https://www.airbus.com/en/newsroom/press-releases/2024-06-airbus-provides-2024-guidance-update