Keeping the momentum growing

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Keeping the momentum growing

The P120 is also the first stage of Europe’s next-generation small launch vehicle Vega C, which, like the impending Ariane 6, is expected to scale up production following a maiden launch this year.

Giulio Ranzo, Avio’s CEO, says Amazon’s colossal order helps expand the company’s capabilities to serve future demand as European startups seek to muscle in for market share.

The publicly listed company reported a 25% jump in revenue for the first three months of 2022 to 66 million euros ($71 million), compared with the same period last year.

Avio’s long-term growth prospects will help the company compete with these entrants for customers and employees, according to Ranzo.

Story Highlights

  • The largest commercial launch contract in history contains 18 heavy-lift Ariane 6 rockets, each with two or four Avio P120 engines as strap-on boosters, depending on configuration.

  • Avio is Vega’s prime contractor and is a subcontractor for the Ariane 6.

However, adjusted EBITDA — or earnings before interest, taxes, depreciation, and amortization — fell 73% to 1.2 million euros as rising energy costs stemming from Russia’s war in Ukraine started taking their toll.

The war also raises questions about Avio’s ability to produce Vega C’s upper stage, which is powered by Attitude and Vernier Upper Module — or AVUM — engines that use a propulsion system sourced from Yuzhnoe and Yuzhmash in Ukraine.

Ranzo  was being interviewed to learn more about Avio’s growth strategy weeks before Vega-C’s critical launch debut. What are the key takeaways from Avio’s recent financial results?

The main message is we are paving the road for very robust future growth, which is pretty evident from the path we’re following in terms of acquiring new orders — both for Ariane and Vega — and for the development of new products and technologies. This prospective growth was also clear maybe a year ago, but it was not as concrete because we didn’t have the orders. Now, the order book is completely full.

So we see a bright future ahead of us, considering market demand is growing so fast. At the same time, we’ve suffered very high energy prices that are affecting near-term profitability.

It will enable us by 2025 to reach the maximum utilization of our production capacity, which in any industry is key to maximizing profits. These boosters are also used on Vega — it’s the first time a family of rockets has been built by using the same booster for the first stage [but taking advantage of this requires] the ability to fully leverage the economy of scale, where the more you make the less they cost.

How has Amazon’s order of 18 Ariane 6 launches for Project Kuiper affected demand for Avio’s P120 boosters? But by nature this is a very long-term business so you don’t care much about what is happening in one quarter or the other; you’d rather look at the next decade or so.