As we at Eurospace publish our annual facts and figures report with the key findings of the European space industry’s economic situation, I find myself looking back at 2024 with mixed feelings.
At the global level, 2024 was a great year for the space sector, with more records broken in satellite launches, satellites deployed and total mass to orbit. Most of the growth was driven by SpaceX accelerating the deployment of its Starlink constellation, and the Chinese space program lofting, for the third time in its history, almost 180 tons to orbit.
In the past five years, the Chinese deployed 726 tons in orbit on behalf of government sponsored programs, compared to only 654 for their United States equivalents (and only 99 for Europe). China is solidly establishing itself as the largest player in all areas of space government programs (and is also moving into Starlink territory, tackling commercial broadband services).
In 2024, the main positive trend for the global space sector was the continued interest that governments worldwide expressed in space programs, from the largest to the smallest. This interest was particularly strong for sovereign programs, like military applications and exploration programs, with the U.S. and China leading by far, followed by Russia and, to a much lesser extent, Europe.
The year was also marked by the consolidation of SpaceX’s market positions in key space business segments, particularly in launch services (SpaceX performed more than half the total orbital launches in 2024) and with the market penetration of its Starlink service, crushing the competition on the fast-growing segment of broadband data connectivity in all segments. The very immediate consequence of SpaceX’s competitive pressure was the contraction of the demand for the other commercial space systems (and the related launch services) accessible to legacy players, particularly ULA and Arianespace on the launch segment and MDA/Maxar, Boeing, Airbus and Thales Alenia Space on the satellite segment, with cascading consequences on lower tier players.
A paradoxical 2024
So, 2024 was somewhat of a paradox, with global business opportunities on the rise, in both the institutional and commercial segments, and with established players facing growing difficulties due to the rise of SpaceX. And while the legacy industry is shaking, more emerging players feel they have an opportunity to seize.
The new space crowd wants to walk in the steps of SpaceX, and a few larger new companies are starting to secure growing shares of government business as they mature and grow their customer base. Regardless, the majority of financial information available on space start-ups indicates that even the more mature of them are not yet in profitable territory, and their survival is very contingent on the level of their cash reserves.
While global fundraising activity was still strong in 2024, with $6.7 billion of new equity, only a small number of companies have achieved a critical funding mass to achieve (or approach) operational status. The majority of known equity tracked in the past decade has gone to just three companies: SpaceX, Blue Origin and Oneweb.
This creates a very unstable situation in the Western world’s space supply chain, with most of the companies struggling to generate a sustainable profit, if any profit at all, while fiercely competing for a demand that remains insufficient to keep them all alive.
A sense of relief
In Europe, the space industry closed the year 2024 with a sense of relief.
In July, the successful maiden flight of Ariane 6, eventually filling the gap after the retirement of Ariane 5 in 2023, felt like a deep breath of fresh air. In October, the European Union came to an agreement with all parties on the concession contract for IRIS2, “only” two years after the entry into force of the Regulation; this made for a happier end-of year for the supply chain, looking at the prospects of a hefty workload increment to develop, build and launch the 10 billion euro ($11.7 billion) constellation.
To top the cake, the industry closed the year with increased final sales at 8.8 billion euros and workforce peaking at 66,000 employees.
Still, the European space industry may need to prepare for a long period of apnea, because the majority of economic indicators are not on the brighter side.
But profits are receding
Organically, our industry is suffering from a massive profit situation. A systematic survey undertaken under the auspices of Eurospace Council unearthed a few worrying facts. The actual profit (measured by EBIT) of all companies in the sector has been constantly receding during the period surveyed (2019-2023), with the sector at large experiencing losses on its space business. Of course, the major losses announced in the space segment by Airbus and Thales Alenia Space in 2024 weigh significantly in the European landscape. But generally speaking, and with very few exceptions, all available data points available indicate that the space systems business in Europe is trending towards decreasing profits; particularly for those players most affected by declining business in the commercial geostationary segment (with cascading consequences on both the launcher and the satellite supply chains), but not only, because the pressure on prices and performance is unusually high in all demand segments.
The first visible consequence of declining profits are the workforce cuts, with the large four players (Airbus, Thales, Leonardo and Safran) cutting down their space workforce by 3% in 2024, and announcing wide ranging restructuring plans in the satellite segment.
Massive layoffs are looming
Notwithstanding, employment in the sector grew by 4% in 2024, under the positive impact of two different trends.
First, the European industry has its order books filled to the brim, mostly with institutional orders thanks to the relentless investment of European states in space programs, in constant growth in the past five years. This growth is registered in our annual statistics, where the share of revenues from European institutional programmes reached a new high of 6.3 billion euros in 2024 (72% of total industry revenues), with a Compound Annual Growth Rate of 3.4% through the decade. And there is more! Considering the large spending backlog on ESA-managed programs (the ESA managed budget CAGR was 4.6% in the decade, but its procurement only grew by 3.6%), there is no medium-term uncertainty on workload.
In order to absorb this work, many companies are hiring, particularly the midcaps, and those that are cutting on workforce are preserving critical resources to support these programs; lacking these positive workload prospects, the workforce cuts in the large four would have been even more drastic.
Secondly, we note that the workforce employed in the bustling segment of space start-ups has spiked again in 2024, passing the 10,000 mark after only five years. The segment now represents 16% of total industry employment. This growth was clearly fuelled by improved access to resources, mostly equity with $4.7 billion raised since 2000, of which $1 billion was raised in 2024 alone (the biggest fundraising year for European space startups active in the upstream), but also the availability of government-sponsored grants and targeted development programs that provided almost 250 million euro in revenue in 2024. While only a few share their revenue details with Eurospace, the data we have analyzed indicates that many players in this segment are now also registering revenues from the sale of products and services, in the range of 300 million euros in 2024.
Still, the vast majority of European space startups are not yet economically (or technically) mature, and their bottom line is usually negative. Considering the estimated cash and employment history, it can be safely assumed that most players are underfunded, sometimes severely. Only a few have some leeway ensured, and they are not necessarily the highest fundraisers.
Labor productivity still low
Eventually, with employment growing at a faster rate than the business, the apparent labor productivity is still very low in 2024 (worth €132,000 per employee), an amount that does not sustain economically a capital-intensive industrial sector employing an expensive skilled workforce (more than half of industry employment has a high education, as shown by our survey results).
With the receding trends in the commercial geostationary segment, where our industry has suffered from strongly declining demand (minus 50% since the all-time high of 2017) calling for restructuring, the related supply chains and the growing influx of new players in the sector, the sector exhibits a growing overcapacity.
The European industry is historically scattered, with many industrial capabilities having emerged at the whim of national policies of ESA member states, resulting in an extremely fragmented industrial base despite the rather strong corporate concentration of most industrial capabilities within just four industry conglomerates — the combination of all space businesses of Airbus, Thales, Leonardo and Safran represents half of the total workforce.
The current trends of growing government support to European space programs should provide additional business opportunities in the medium term for the growing industrial base, but the national obsession that drives this spending — enshrined in the ESA georeturn rule and exacerbated in national military programs — combined with the lack of a coordinated industrial policy, strengthen the looming spectre of overcapacity, potentially clouding the future of the European space sector rather than enlightening it.
The diminishing profits and decreasing labor productivity are strong indicators that cannot be ignored in this context, and they are particularly troubling considering that global demand for space systems is growing.
The problem, for Europe, is that the main forces behind this global growth are the two global space powers, China and the U.S., pouring more of their taxpayers’ money into sovereign programs, not the mirage of a self-supported future with a trillion-dollar space economy.
European policies inspired by the “space economy” seem to want to prepare our industry for a future of growing commercial demand and satellite production in the thousands every year. It is high time they acknowledge instead that all recent political statements in Europe consistently point, albeit without necessarily being precise in terms of time horizon, towards an increased demand in Europe to meet security and sovereignty needs.
Pierre Lionnet is the research and managing director at Eurospace, the trade organization of the European space industry. He labels himself a space economist, having trained as an economist and been professionally involved in analyzing space markets, space industry supply chains, and space technology and innovation trends for the past 30 years. This op-ed reflects his views and does not constitute a formal position of Eurospace.
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