Airbus Group NV’s share price down, plans a joint venture with Safran SA to develop space launchers

Airbus Group NV made a joint statement with Safran SA today, revealing that the two companies plan to form a joint venture in an attempt to accelerate satellite-launch vehicles development. The companies are also trying to reduce their expenses in the environment of constantly increasing competition from across the Atlantic.

As reported by the Financial Times, the Chief Executive Officer of Airbus NV – Mr. Tom Enders commented on the two companies decision, saying: “In order to remain relevant and competitive for the future we need a much more efficient industrial structure. This is what the customers expect from us.”

The joint venture between the companies will be divided 50-50 and is expected to combine the launch technology of Airbus with the propulsion systems of Safran. As reported by the Financial Times, the companies said that the move of joining their forces is a step toward a “more integrated, more efficient and hence more profitable launcher business in Europe”.

Airbus Group NV and Safran SA are expected to join their forces and start working together on some contracts in their new venture until the end of 2014. The companies did not disclose any of the financial terms of the deal, but explained that the collaboration would make Europe more competitive against the U.S. in the space segment.

Both the U.S. and Europe have been facing some difficulties when it comes to cutting costs of their primary rockets. That is the reason why reducing prices has become quite important considering the increasing competition in the business segment.

As reported by the Wall Street Journal, Mr. Paul Herteman, who is the Chairman and Chief Executive Officer of Safran SA, commented: “We are at a defining moment to drive change as we have to be more agile, our products more affordable, and our structures more integrated.” The French government also expressed its opinion on the partnership between the two companies in a statement released today, which was cited by the Financial Times: “This is a major step towards the consolidation the European space industry, creating jobs and maintaining our sovereignty in the sector.”

Airbus Group NV was losing 0.7% to trade at 50.92 euros per share by 13:57 GMT, marking a one year change of +18.86%. According to the information published on the Financial Times, the 25 analysts offering 12-month price targets for Airbus Group NV have a median target of 60.00, with a high estimate of 73.00 and a low estimate of 30.50. The median estimate represents a 17.00% increase from the last price of 51.28.