Ariane 6 rocket sees first commercial deals in race with SpaceX

Ariane 6, Europe`s next-generation space rocket, is expected to win its first two commercial launch orders in coming weeks, company officials said, a key milestone as the European launcher vies for orders against Elon Musk`s U.S. competitor SpaceX.

Operator Arianespace faces increased competition from SpaceX and Blue Origin, owned by Amazon CEO Jeff Bezos. Japan and India also pose a growing challenge.

Ariane 6 has three institutional orders in hand from the European Commission and France and is close to signing deals with two commercial customers, said Mathias Spude, spokesman for ArianeGroup, a joint venture of Airbus and Safran, that is the majority stakeholder in Arianespace.

ArianeGroup has invested 400 million euros of its own funds in the 3.4-billion-euro development of Ariane 6 - a project key to ensuring Europe`s independent access to space and a market valued at over $1 trillion by 2040.

Manufacturers say the rocket will be more versatile than Ariane 5, able to carry out missions from placing as many as 90 small satellites in low-earth orbit to taking classic spy satellites to far higher perches in geostationary orbit.

But the business case depends on drumming up enough commercial business to augment the 5-6 institutional launches expected in Europe annually in coming years, about a quarter of those planned in the United States.

European governments also face industry pressure to use Ariane 6 even if they could get cheaper rides using SpaceX.

"Europe continues to need its own access to space - the market of the future," said Matthias Wachter with the BDI German Federation of Industry. "It doesn`t make sense to use European tax money to develop our own rocket but then launch satellites with competitors from the United States or Asia."

Ariane 6, due for a first launch in 2020, was designed to save significant costs compared to Ariane 5, but industry experts say it will still cost around 70 million euros per launch - well above the rate offered by

SpaceX, which uses reusable rocket technology and can count on larger U.S. orders.

Ariane 6`s designers insist innovative production techniques will favour the European launcher when the commercial market recovers from a recent slump.

"When it wakes up ... we will be on the market with a rocket that is 40 percent cheaper, and will continue to reduce costs after that," Spude told Reuters at the Ariane 6 production site.

Still, experts say SpaceX is widely credited with jolting the overall market with a keen focus on cutting costs, forcing Europe to shake up its launch industry.