The Z23 second stage is where the July Vega failure originated. Without a specific root cause found, the inquiry board proposed stricter procedures to be in place at Avio’s production facility. Avio produced these images, showing development of the stage to be used in the next flight, in its Nov. 7 presentation to shareholders. Credit: Avio SpA

LONDON — Launch vehicle hardware builder Avio SpA said its 2019 financial results will not suffer from the fact that only two of a planned 4-5 Vega launches will have occurred, and only four of the planned five campaigns for the heavy-lift Ariane 5.

Avio is prime contractor for Vega and a major component supplier for Ariane 5.

Neither vehicle has been as active as was planned early in the year. For Vega, the expected four or five launches including the inaugural flight of the more-powerful Vega-C vehicle did not occur because Vega has been grounded since its July failure.

The vehicle is currently expected to return to flight around March, and its manifest is unclear for 2019.

In a Nov. 7 investor presentation, Avio said it expected the Vega-C flight to occur by mid-year.

The July failure was caused by a still unexplained “sudden and violent” event localized in the forward dome of the Vega rocket’s Zefiro-23 second stage.

It was the first failure in Vega’s 15 flights. An investigation could not identify a root cause and instead said Avio should reinforce production verifications overall. Avio told investors that given the lack of any other explanation, there was a “possibility of an undetected non-compliance in production” of the Z-23 stage.

In his Nov. 7 presentation, Avio Chief Executive Giulio Ranzo displayed pictures of the production of the stage planned for the return-to-flight launch.

Credit: Avio SpA

Much of Avio’s revenue comes not from production of vehicles  and components but from development programs managed by the 22-nation European Space Agency (ESA).

In addition, the company’s customer, the Arianespace launch service provider, books batch orders that mean hardware builders may not feel any immediate effects of a failure.

Avio is an Arianespace shareholder but shareholders in Arianespace do not view their investment as a source of funds. For Arianespace, the lower-than-expected activity in 2019 will have a direct effect on its revenue and profit.

At the end of 2018, Avio had been counting on three or four Vega launches and, in addition, the inaugural flight of Vega-C. Instead, 2019 like 2018 will be a two-launch year. Vega-C does not use the Zefiro-23 stage.

Longer term, Vega rocket competitiveness will depend on the rocket’s being launched as often as possible to reduce unit costs as it confronts a long list of competitors entering the market to launch small satellites.

The heavy-lift Ariane 5 rocket is being phased out between 2020 and 2022 in favor of the Ariane 6. The Vega and Vega-C first stage serves as the Ariane 6 rocket’s strap-on booster. Depending on the mission, Ariane 6 carries two or four boosters.

Ariane 6, whose first flight is scheduled for late 2020, is likewise facing a highly competitive market among heavy-lift vehicles and will need to fill its manifest in order to reach the production cadence required to keep its costs down.

ESA is preparing a package of support programs to ease the market entry of Ariane 6 and Vega C. Totaling 2.67 billion euros ($2.95 billion), the measures will be decided at a Nov. 27-28 meeting of ESA ministers in Seville, Spain.

It is because of these development support programs that Ranzo could say:

“The Vega anomaly does not change our medium- and long-term growth plans.”

For the nine months ending Sept. 30, Avio reported revenue of 270.3 million euros, up 3% from the same period in 2018, and EBITDA of 23.5 million euros, up 5% from a year earlier.

Avio said the revenue increase “is primarily driven by the development activities of Vega-C and the new P120C that will equip the next-generation launchers Ariane 6 and Vega-C.”