European Space Agency desperate to compete with SpaceX for commercial space flight

Weeks after its dramatic coup in landing a probe on a speeding comet, Europe is hoping a last-minute deal to provide funding for the workhorse Ariane rocket will prevent its space ambitions falling back to earth this week.

Anxious to preserve its own access to space, the 20-nation European Space Agency will seek to put aside differences over how to respond to U.S. low-cost rival SpaceX and safeguard thousands of high-tech jobs at ministerial talks on Tuesday.

After two years of wrangling, the outlines of an accord to fund development of a new Ariane 6 satellite launch vehicle appeared to be in place after Germany dropped its insistence on a prior upgrade to the current Ariane 5, officials said.

France is likely in return to back continued European funding for the International Space Station.

"It would be very serious if there is no decision on Dec 2 because Europe would have a competitive delay that it would never manage to reverse," said Karim Michel Sabbagh, chief executive of Luxembourg-based satellite operator SES.

With the arrival in 2013 of SpaceX, founded by electric car entrepreneur Elon Musk and offering cut-price satellite launches, Ariane needs to lower costs dramatically.

The chief executive of Europe's largest space contractor Airbus Group, Tom Enders, told Reuters a deal would mark a "new chapter" in the way Europe approaches space.

But he called for a clean break with bureaucratic public-private space industry structures to avoid Europe being "marginalized" by international competition.

"A departure from current ways of working is a precondition for future competitiveness of the European space business".

Airbus Group, which builds the Ariane 5 launch vehicle, is expected to inaugurate a previously announced joint venture with engine maker Safran on the eve of the talks to help secure Ariane's future. It will incorporate Arianespace, the launch services firm which operates Europe's satellite launcher.

CALL FOR REFORM

The new venture is the most serious effort to reorganize Europe's space industry and is being set up in the hope the one-day ministerial meeting in Luxembourg will back Ariane 6 - ending a compromise two years ago which split potential funding between the upgrade known as Ariane 5ME and an eventual new Ariane 6.

But Europe's space industry remains heavily influenced by state agencies and industry sources say removing multiple layers of management is key to keeping Europe's commercial activities competitive.

SpaceX offers launches for around $60 million (50 million euros) compared to 70-90 million euros a shot expected for the Ariane 6 and an average Ariane 5 launch price of 130 million euros ($160 million).

Efficiency comes into play in a cut-throat global commercial market where most companies can only rely on national links when it comes to sensitive defense satellites.

RUSSIA'S ROLE

The European Space Agency, an intergovernmental organization with 20 member states from across Europe, was founded in 1975 to pool the continent's finances and brains at a time when the United States and Russia had virtually monopolized space.

But despite Europe's Ariane capturing 50 percent of the market, a costly system of job distribution and rival design offices has cast a shadow over Europe's commercial activity even as it basks in scientific success like the Philae comet lander.

Science ministers will also decide on whether the ESA's participation in the International Space Station will continue beyond 2020, its original shutdown date, and in what way.

The United States earlier this year said it would keep the ISS running until at least 2024, but Russia is looking at going alone and creating its own orbital station. Europe and Russia are also working on a two-mission ExoMars probe shot to Mars.

"(The ISS) shows we can achieve a lot if we all work together and it's important to highlight that given the tensions building up between Russia and the West," Daniel Brown, an astronomy expert at Nottingham Trent University, said.

ESA's budget for 2014 was about 4.1 billion euros ($5.12 billion), and roughly equates to the price of one cinema ticket each year per each European tax payer.

NASA's budget is $17.6 billion in 2014. The budget gap has made the achievements of Rosetta appear all the more impressive to many observers, but Europe's space industry is lobbying for a healthy commercial launch activity to support such projects.

ESA plans also include a mission to orbit one of the icy moons of Jupiter and one going to Mercury.

The Horizon 2000 program, developed in 1984, transformed Europe into a world leader in many areas, including solar physics, cosmology and X-ray Astronomy, said Ken Pounds, former CEO of the Particle Physics and Astronomy Research Council.

Pounds said he hoped the success of Philae would lead to a virtuous circle "where Europe is proving it can do world-class things, people feel warm about it, and the political class respond to that."

(By Victoria Bryan and Tim Hepher; additional reporting by Cyril Altmeyer; editing by Philippa Fletcher)