Arianespace, celebrating its 25th birthday, claims the worst is behind it. "We have reasons for satisfaction," its director-general Jean-Yves Le Gall said.

At a technical level "things are back to normal", while commercially the situation is "exceptional" with orders for 40 satellites to launch, and financially there has been "a return to sustainable balance".

The company, the world's leading commercial launcher of satellites, suffered a severe setback in February 2003 when its new Ariane 5 ECA exploded and the market for the launch of telecommunications satellites collapsed.

But a second attempt to launch an Ariane 5 ECA, in February this year, was successful.

The company hopes to increase its profit margins with its new Ariane 5 ECA launcher which can carry a payload of 10 tonnes, compared with the six carried by a normal Ariane 5.

By the end of the year it plans to launch nine satellites with five Ariane 5 rockets for the space centre at Kourou in French Guiana and three with the Russian Soyuz launcher operated by its subsidiary Starsem from Baikonur in Kazakhstan.

For 2006, "we plan to make six launches with five Ariane 5 ECAs and the launch of the ATV (automatic transfer vehicle supplying the international space station) while in 2004 we only carried out three launches," Le Gall said.

But the launching of the French military communications satellite Syracuse 3A, planned for May, has been put off for several months to the great annoyance of the French defence ministry.

On the commercial side, Le Gall said there were "a certain number of contracts in the pipeline... I think I shall be making some announcements" at the week-long Paris Air Show opening Monday, even if "2005 will be a bit below

So far this year Arianespace has signed two contracts compared with a dozen in 2004.

"The market is flat," he said. He thought that there would be a worldwide total of 15 to 20 launches this year, of which Arianespace would have half, as in 2004.

The European Space Agency will not be at the show because of financial problems.

European satellite manufacturers are regrouping: Alcatel in France and Finmeccanica of Italy have decided to merge their space activities and have set up two joint companies -- Alcatel Alenia Space and Telespazio.

That leaves Astrium, the third big European manufacturer, on its own. Astrium made an unsuccessful bid to merge with Alenia in December 1998.

Th Franco-German European Aeronautic Defence and Space Company (EADS), owner of Astrium and chief shareholder in Arianespace, has restored health to its space sector after two years of austerity.

The European Galileo project, which plans to deploy 30 satellites and could be a competitor to the US GPS company, could lead to new business possibilities and mergers.

Two consortiums, iNavSat (EADS, Thales, Immarsat) and Eurely (Alcatel, Finmeccanica, Aena, Hispasat), are rivals to get the Galileo contract, with the prospect of income of 500 million euros (606 million dollars) a year by 2020. A merger between the two is possible.

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