Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Avio 2021 First Half Results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Giulio Ranzo, CEO of Avio. Please go ahead, sir.
Thank you very much, thank you all for joining the first half results call. I hope you all have the presentation we uploaded on the website. I will jump directly to page 3 on our agenda. I will cover an initial part with highlights and then the main events of the 1st semester, and then Alessandro Agosti, our CFO, will go over the details of the financials. Then I'll come back to cover a bit of the outlook for 2021 and beyond. Jumping on page 4, if I had to summarize what happened in the 1st semester, I would say we have suffered softer economic performance as a consequence of the effect of the failure we suffered in November, which caused us to work a lot, to resume flights.
We improved our order backlog, and that is extremely important because it seems visibility is increasing, and so we're stretching out towards the future. During the first quarter, we worked a lot to restore full flight worthiness in our activities of assembly, integration, and testing. Following the failure we suffered in November, we put together with the European Space Agency a plan to cover flights number 18, 19, and 20 to make sure they will be perfectly flight worthy. We aggressively worked on that, especially in the first four to five months. As a consequence of that, we had a very significant slowdown in the first part of the year and the progress on development activities amid, of course, a persisting COVID-19 set of challenges that you can imagine in conducting our operations, that certainly did not help.
At the same time, we accumulated new orders for Vega-E development, which was something already announced, but of course, we negotiated the contract and we closed that pretty well while we worked on the first anticipated part of the contract. Also, we received a contract for the propulsion system of Ariane service module that was actually beyond our expectations in size. As a result of that, we also started to hire people, more resources, to strengthen our ability to deliver in operations according to very strict flight work procedures, and also to prepare to execute on this incremental backlog. If we now go to accelerate and try to recoup some of the time we have unfortunately lost, and spent on restoring our capabilities, then we need to have more people on the ground. So we restarted hiring people.
Backlog ended at EUR 835 million, up 13% with respect to year-end. Revenues were down 24% and EBITDA was down 47%. Towards the end of the year, we'll talk more about that, we will suffer softer economic performance. We cannot completely recover in the second half of this year. As I said, we will likely exit 2021 with an improved business visibility. We hope to be with a backlog between EUR 850 million and EUR 900 million on revenues anywhere between EUR 300 million and EUR 330 million. Which means pretty much having a visibility equivalent to three years, which is a good visibility to plan for the future and to ensure we restore a growth path as we used to have pre-failure and pre-COVID effects. EBITDA should fall anywhere between, EBITDA adjusted, between EUR 35 million and EUR 37 million, down 16% versus last year.
In terms of the outlook, I think that the key takeaways are that Vega and Ariane launch activities are back on track. We executed two launches with Vega rapidly in sequence, and we'll cover that. We are preparing for the Vega-C maiden flight in the first quarter of 2022 and for the maiden flight of Ariane 6 anywhere between the second and the third quarter of 2022. The P120C production is ramping up as expected in preparation, of course, of the Vega-C and Ariane 6 maiden flights. The subsequent commercial flights are already booked. The news in the last very few weeks is that the European Space Agency member states have voted a resolution to secure for Ariane and Vega a good portion of the European government's launch demand until the end of the decade.
That is very important when you launch new programs, knowing that your governments will certainly buy a certain number of launches. It helps prepare the future. It was an extremely positive news of the last few weeks. Potential for new contracts in development activities emerge when Italy loans its portion of the PNRR, quite a substantial amount of resources will be devoted to space. Among this, there will be resources for access to space, that we will pitch, and this opens up a new incremental opportunity that wasn't there. All in all, if I have to summarize the first quarter as the negative of a softer economic performance, but the positive of a much better visibility and a restored credibility on delivery.
Jumping to page 6, with the key highlights. As I said, we performed two missions in sequence with Vega, both of which were for Airbus primarily, with their Pléiades Neo constellation, a very novel Earth observation type of satellite. It's a mini constellation of two to four satellites. In a matter of about three months, we launched them both very successfully. In combination with this main payload, we leveraged our technology for multi-payload delivery in orbit. We launched five more auxiliary payloads on the 18th flight and four more auxiliary payloads on the 19th flight. That's good because it has established, let's say, a systematic way of doing multi-payload delivery, of being flexible, adding customers even at the last minute. That has also optimized revenues, which obviously helps in this very context.
We have one more flight scheduled by the beginning of November. Immediately after, we will jump on the launch pad to prepare for Vega-C. It'll take time until probably end of the first quarter to prepare for the launch setup, the launch pad with all the new systems we have prepared, to support Vega-C. It will be very exciting. The hardware will be shipped at the beginning of November. It'll be a very intense time, preparing for the maiden flight. In terms of development activities, we are currently running hardware-in-the-loop preparation activities of maiden flight, so running, let's say, a simulation of the mission. We are conducting the formal ground qualification review, which is basically the last review process with the European Space Agency prior to flight.
With Vega-E, we signed the development contract in July. We had signed an initial portion of it earlier on, this is EUR 120 million, more or less, contract that will cover the development of the cryogenic upper stage. Very important. Because in parallel, we also completed the construction of our propulsion test facility, which will be instrumental for our development of Vega-E because this is where we will test our new liquid oxygen methane engine. The facility is completed, it's currently under commissioning, and parts are being shipped to the site to be assembled. Such that by year-end, we should be able to fire test the first article of the M10 fully integrated engine. That will be a very important milestone we really look forward to reach.
On page 7, we reviewed also our performance. I can say we have established a better-than-average reliability track record. On the right side of the page, you see the performance of many launchers across their first 19 missions, because this is a way to compare launch performance on a like-for-like basis in a way. As you can see, Vega has performed 19 missions, with two failures, so therefore a failure rate on average of about 10.5%, which is slightly less than the average of the peer group. As time goes by, of course, these statistics consolidate, but I think we are now back where we want to be. We definitely look forward to execute more flights in sequence, with good success. I think this was important to regain customer confidence across the board and make sure that will support also the commercial activity. This was done by implementing a massive set of over inspections across the activities of manufacturing, assembly, integration, and testing.
We have devoted a lot of time to redesign the process very accurately, to train resources properly and make sure that everything is checked extremely well. What is good about it is that the performance of the last two flights were exceptionally good in terms of orbital injection accuracy, extremely accurate. Which means that we have a product that once we integrate properly as we should, it's extremely well-performing, and we are very encouraged by that.
On page 8, we show the advancement of Vega-E as I just anticipated. Here you see when I signed the contract back in July. Vega-E will be very exciting as a program. It will give yet another dimension of performance and flexibility by 2026. I remind everyone that this launcher version will feature the reduction from four to three in terms of propulsion stages. It will be greatly simplified with respect to the current Vega-C version. It will feature a liquid oxygen methane upper stage, which will be more capable, so will provide more performance and more flexibility, and ultimately, this will result in a lower cost per kilogram transported to space, which means reaching another dimension in terms of market competitiveness.
What you see on the right side are the different parts of the engines being readied for assembly at the test facility, which you see in the bottom of the page, which is now being commissioned. By year-end, we'll start flying the engine for testing at this facility. This is an extremely important milestone if you look across the different set of competitors. What really matters is when you can measure the performance of your systems on the ground prior to flight, this facility will be instrumental to do that.
On page 9, a quick recap of where we are with Ariane. Ariane 5, as you know, is on its phase-down part. It has flown once this year, will have two more flights by year-end. It has successfully flown on July 30th. I was there, base flight. There will be another double launch GTO, in October, by mid-December, Ariane 5 will launch the James Webb Telescope, a major event for European launchers. This is a very precious payload. [Non-English content]
Okay. Perfecto. You check mute.
A very precious payload for Ariane, definitely. Meanwhile, the Ariane 6 launchpad has been completed. I think it's being inaugurated this week or next. Everything is being readied for an Ariane 6 maiden flight in the second half of 2022. That's a set of key highlights for what happened in the first semester. As you can imagine, it was very intense, but it allowed us to restore credibility and move back on a growth path after a very painful first part of the year. Maybe Alessandro, you can follow with the details of the financials.
Thank you, Giulio. Good afternoon, everybody. Shall we go to page 11? We have summarized our key financials. As you can see, net sales continues to grow back to 3% versus year-end. This will be a 10% positive increase in full year 2020 up on 2018. In the first month of 2021, as Giulio said before, activities required to implement the recommendation issued by independents, the inquiry commission from the authorities last November, required a significant effort with the consequent postponement of certain development activity originally expected in the first half of 2021, on particular in Vega-C and Vega-E launches, with effects on the revenues and margin associated with these activities. This was main factor causing the lower result in our year 2021 with respect to our year 2020. However, this is a postponement of result, not a loss.
We will recover this development activity the second half of 2021 and beginning of 2022. Revenues were also influenced by expected Ariane 5 phase out, only partially balanced by the ramp-up of Ariane 6 in this 1st semester. As you can see here, decrease in EBITDA is mainly attributable to the reduction of course in revenue and lower absorption in that fixed cost, which has been only partially offset by the phase-out stability during Ariane 5 and the containment of general and administrative expenses. The higher decrease on EBIT, more or less a couple of million, is due to the increase of the risks related to previous years recovery, particularly on the production of P120C engines. Between reported and adjusted figures are included in non-recurring cost of about EUR 2.4 million, substantially in line with prior semester, were EUR 3 million, mainly due to supplying COVID-19 costs. Net result is substantially in line with EBIT due to the limited impact of financial expenses and taxes as usual.
Shall we move to page 12? We have reported some details on net order backlog, which continues to grow. In the semester, we had EUR 250 million order intake. Basically, around about EUR 100 million for development and adapter activity on Vega-C and Vega-E, and EUR 80 million to cover production activities for around a decade, with effect to the booster assets and certain booster production impact that business. Even considering revenue, which as you know, downloaded the backlog in line with last year's semester, the backlog would have increased anyway by about 8%-10% this semester, thanks to these new EUR 200 million.
We move to page 13. We have reported revenues affected by the slowdown Vega-C development activities. On the right side of the chart, we have reported the revenue by line of business, and on the left side by production development. Vega has a decrease in the production for space supply, as we commented before, and in development for postponement Vega-C activity. Ariane show a decrease in development of the delays, basically, of the transition t o Ariane 6. The mix between production and development remain as you see, substantially unchanged.
On page 14, we have reported the main sources and uses. Net exposure, as you know, a seasonal trend and typically the trend tends to decrease in the middle of the year and raise again towards year-end due, basically, to the dynamics of the working capital. However, this semester, the contribution working capital is better than last year semester due a stable collection profile versus slowdown in activities, as discussed before.
We move to page 15. We have reported the bridge on the cash between end of 2020 and June. As you can see, the operating cash flow absorbs about EUR 15 million, basically, for CapEx. Non-operating cash flow include the dividend distribution of June and May following the approval of 2020 results. Finally, on page 16, we have a report that is based on our current costs by nature. As you can see, the main part is represented by the cost for return to flight for VV18 and the COVID protection devices and other related costs. I leave back the floor to Giulio for opportunities and outlook for the rest of the year.
Thank you, Alessandro. Following the view of the first half, we thought it'd be useful to provide some view of what follows. What we do in this section is we review the outlook, not only for 2021, but actually also beyond. On page 18, first of all, some details on the European Space Agency resolution adopted by all of the 22 European member states. Upon, obviously, the very imminent first flight of Vega-C and Ariane 6, the member states have decided to award Ariane 6 and Vega-C minimum amount of launches every year, to be used for European government payloads. What they have agreed is that they will secure four launches every year for government purposes for Ariane and two launches every year for Vega-C. That you can consider a minimum annual volumes, guaranteed in a way, that will apply from 2025 onwards.
Keep in mind that between now and 2025, most of the capacity is already in backlog for both Ariane and Vega, as such, this model applies very well to the portion of the backlog that goes beyond current visibility. Allow me to say that this resolution is extremely important in securing longer term visibility with respect to what we have so far. Not only that, the European member states agreed on a package of support, to maintain operational activities beyond the minimum annual volumes to provide option, of course, for much larger flight rates for each of Ariane and Vega-C. This is extremely important, since the annual flight rate that we have in our targets are obviously way beyond these minimum levels.
What is interesting to note is what is on the right side of the page, which is the European Space Agency forecast for European institutional missions. As you can see, in the period 2025-2030, so towards the end of the decade, they estimate anywhere between four and five government payloads for Ariane, which matches pretty well with the guaranteed launch demand. While they forecast around four launches every year for Vega, which is twice their guaranteed demand.
This is important because it means that regardless of commercial opportunities and export, which we would obviously pursue in priority, there will be a portion of market that is way more accessible to us than others, and that is there, will be there, and will be fueled by the many programs that the European Space Agency and different space agencies in Europe, including the European Commission, have already launched, and for which they already have visibility towards the end of the decade. That supports, in our view, a pretty good growth towards the end of the decade if we successfully execute, of course, on our programs as discussed.
In fact, on page 19, if we look more broadly at the launch demand, not only for European government purposes, but in general all around the world for government and commercial purposes. We have reported here the expectation for world total mass at launch. We have started back from 2015 when we started. I remember when I started as CEO of Avio, it was back in 2015. We had an expectation for 2020, for the total mass at launch to reach about 350 tons in a year. Now, in 2020, the actuals well exceeded the expectation that we had back then. In fact, in 2020, the actual mass at launch exceeded 500 tons. Now, looking towards 2025 and 2030, we now have an expectation to double the size of this demand to about 1,000 tons every year by the end of the decade. I hope we will observe exactly what we have seen in the past, that we most probably even exceed this demand growth. Now, why that?
In certain sectors of this demand, let's say by the use case, we see higher growth, in particular in the telecom industry, in science and exploration, and in Earth observation. We tend to see a very clear trend towards an acceleration of growth with respect to just what we used to forecast a few years ago. This is very important for us because if you think about it, the telecom business has been historically the business of Ariane, in which Ariane has been quite successful. Today, this business is being, let's say, shared with a number of competitors, but the pace of growth is such that there will probably be way more opportunity than in the past.
Science and exploration has also been traditionally our captive core business with the European Space Agency. Earth observation, which happens to have the largest expectation for growth rate, has been the everyday business for Vega. All in all, I think the prospect for the demand in the business have improved in the very past 12-24 months. The pace of growth has probably grown quite substantially. On top of this, I would say the expectation for growth is good on the production side, on the delivery of launcher in general. Now let's review what happens also on the possibility to generate revenues, with customers to develop new technology, new rockets, and so on.
On page 20, I report a very brief summary of what has been communicated so far in Italy on the application of the European Recovery Plan. The European Recovery Plan is obviously a European-wide initiative to support countries to grow after the effects of the pandemic. Italy is the largest recipient of the European Recovery Plan in Europe, and has devoted substantial resources to space. Order of magnitude EUR 2.4 billion in the period 2022-2026.
The Italian Space Agency has been tasked to identify where to invest these resources, and they have communicated that they have four main areas of investment that they are looking at. One is satellite telecommunications for IoT and quantum communications. One is the Earth observation, where they intend to build a high-revisit rate Earth observation constellation for national purposes and protection of assets. They have one initiative in-orbit services, which is a segment that is presently developing and is quite attractive.
They have a fourth area of interest, which is called Space Factory , that partly addresses the digitalization of industrial production, but largely addresses the development of new green propulsion engines and demonstrators. Which is essentially the core of what we do, and it's fully complementary with the programs we're actually doing within the European Space Agency. In the bottom of the page, we have tried to gauge where we hold most interest in this type of program. In Earth observation, we will not have a direct development activity, but the Earth observation constellation needs to be launched. We think we have a pretty good chance of playing a crucial role in the launch of this Italian Earth observation constellation, in this period of time.
In the proposed space factory initiative, we definitely have an opportunity to have a complementary budget to accelerate the development of our liquid oxygen methane technology. Within in-orbit services, we can also move along the lines of what we are doing with the Space Rider program within the ESA framework. We think that all in all, this program, if well executed, and if we succeed in capturing this opportunity, shall provide incremental opportunities with respect to what we just used to have a year ago. That is definitely important in combination with the prospects for the production business.
If we put this all together, and we look at the guidance for 2021, on page 21, we have summarized the key elements of the expected guidance for the year. We expect to increase the backlog even further, okay? Anywhere between EUR 850 million and EUR 900 million, depending on how things go. I wouldn't be very picky on the number. Some orders may slip a few weeks, may not fall within the year. Doesn't matter. The expectation for sure is of a growing trend on the order backlog for the many reasons we have said before.
Revenues this year will fall anywhere between EUR 300 million and EUR 330 million. We'll try to catch up on the progress of development activities, but we will not be fully in the position to recover all of the ground that we have unfortunately lost in the first half of the year by executing so many activities for resuming of flights. As a consequence of that, EBITDA reported will fall anywhere between EUR 30 million and EUR 32 million. We expect a charge of about EUR 5 million in non-recurring costs. This means that the adjusted EBITDA will be anywhere between EUR 35 million or EUR 37 million. This obviously is non-recurring costs, which contain part of the cost incurred for restoring and resuming flights worthiness, and partly to address the COVID-19 different challenges we have in running operations under pandemic. As a result of that, we will have a net income anywhere between EUR 10 million and EUR 12 million, with some marginal effect of financial charges expectation, which, as you know, are typically very low in our accounts.
2021, just because of what we have said, is not very important at the end of the day, because as we know, the play is well beyond 2021. I would say it goes well beyond 2022 and 2023. It is important we spend some time to think about what will happen beyond 2021. We'll probably try to be more precise with you towards the end of the year. At this stage, I'd like to give you at least some qualitative points around what we expect beyond 2021.
On page 22, we observe that, first of all, the strong backlog and cash position helps us growing the business back at pre-COVID level all across the period 2022 and 2023. Between 2022 and 2023, there's nothing from a commercial point of view that can change the destiny, the numbers, because most of it is already in backlog. Actually, probably 95% of it is in order backlog. It will stay without a busy in execution to regrow the revenues and consequently also the profits back to pre-COVID and pre-failure levels, okay? Back to 2018 or so. Meanwhile, the market and the commercial opportunities are growing more than anticipated.
As we have seen, the market will be twice the current size by 2030. We have a fantastic window of opportunity to build more backlog for the periods beyond 2023. As I said, we are currently pitching commercial opportunities beyond 2024. We think that in that range between 2024 and 2030, there will be positive surprises for incremental growth. Along this path, it is very reassuring to know that there is a secured European institutional demand guaranteed across the decade, on which we can build to actually fuel this incremental growth I'm talking about. On top of it, the recovery plan will start sometime in 2022, and will provide incremental and unforeseen opportunities for accelerating on technological developments all across the period 2022-2026.
If we have to go after these incremental opportunities, we also necessarily need to increase the pace of investments, improve the technology, improve capacity, and so on. These resources from the recovery plan will be instrumental to reach this growth. A lot of work, but a lot of opportunity at the same time. Last, and absolutely not least, at the end of 2022, there will be the next European Space Agency Ministerial Council that will launch new resources for new development contracts in the period, let's say 2023 to 2025. This will be the occasion to capture further contracts and extend the product roadmap beyond 2025, actually.
In complement to all we have said before regarding also the recovery plan, all this should be the package that I would call growth to 2030, which is pretty much the time span that we should be looking at when considering the size of the opportunity we have ahead of us and the way we should value the inputs and the outputs. This is at least the way to look at it as managers and investors at the same time. On this same topic, we are working through a review of our strategic planning exercise, which of course, takes stock of what has happened in the course of the last two years, and how we have now come back after having gone through many difficulties and replan the success, essentially the exercise towards the end of the decade and partly beyond.
We'll try to be more precise into these expectations as to the degree that we can, but I wanted to provide you some of the key highlights for you to be able to grasp where the opportunity is and how we plan to be supported, also financially, to make it happen. With this, I think we're done and we're happy to answer any questions.
Excuse me, this is the Chorus Call conference operator. We'll begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Martino De Ambroggi with Equita. Please go ahead.
Yeah. Good evening. The first question is on the order intake. Just to be sure, for the current year, the order intake, roughly EUR 450 million plus, does it not include any contribution from the Italian recovery plan, or something is included?
No. In 2021, we don't have anything yet on the recovery plan. You know that the recovery plan is being implemented administratively. I do not anticipate that we will be able to get by the end of 2021 to already incorporate any of that.
Okay, perfect. The second is more difficult, so I probably know the answer, but you presented EUR 2.4 billion as a global plan for the space sector. I imagine it is very difficult and too early to, but what could be the magnitude that you could take from this bigger cake?
This is a bit of a difficult question for us as well. Let's say, it's difficult, I explain to you why, because it will be, if, let's say that the perimeter of the recovery plan remains as the agency has currently outlined on this initiative. On the Earth observation side, it will be essentially the procurement of launch services to enable the launch of this constellation. Okay? We don't know yet how many launches this will require. What we know is that on the current distribution of funds, a significant amount of funds have been earmarked for Earth observation. There it will be flights, which doesn't change anything in the technology, but provides additional business. In a way, it's even simpler.
On the access to space initiative, we don't know exactly the figure, but if I had to, let's say, to create an ambition, perhaps it could be something maybe less than what we typically get from a ministerial conference, so to speak, but not so much less. A pretty sizable package. This is difficult to estimate because it will require bids and proposals that needs to be submitted and contracting and so on. It's not guaranteed. We need to pitch for it. As you know, there is one rocket player in Italy. If we do well, I think we are in good stead. The amount is sizable. It will grow by the substantial degree, the availability of funds with respect to what we typically receive from a ministerial conference. It will grow the number of flights. As a consequence of that, we think is a substantial difference. We're not talking EUR 20 million.
Yeah. Very clear. If I remember correctly, the last Ministerial Council worth EUR 400 million for us-
Almost EUR 500.
Almost EUR 500 to be spread over?
Three and a half years.
Okay. When do you expect this resilience recovery plan will fix the award? Just to have an idea of when this will materialize into orders.
Italy expects to award contracts in 2022. I don't know whether they will succeed, but the money needs to be spent by 2026, I believe, by the consequence of European regulation. They will be pretty quick. Okay?
Okay. This should be spread the same typical ministerial council business, or probably longer?
It will be probably, I think period 2022-2026.
Okay.
It's five years.
Okay. Perfect.
It will overlap with that of the ministerial conference.
Yeah, clear. Okay. The second is on the EBITDA guidance current year. How much is the fiscal benefit of R&D incentives assumed in your guidance?
Between what we expect and what is now fairly stable , I would say.
Okay. It should go gradually in the next few years.
Yes. This is the core which now could be rise. We have more or less five years in this year, gradually up to 2026. Depending on the law. Probably the law will be confirmed for the future within the intention to sustain the Italian economy.
Okay. The last question on the EBITDA. You are factoring in EUR 5 million of non-recurring costs, which is more or less double than in the first half. If I look at it, of your first half non-recurring cost, it was mainly referring to the Vega return to fly, and just a minor part for COVID emergency. How you double this cost when I don't want to be too optimistic, but it seems to be better than it was in the first half when you had Colleferro in the red zone for two months.
COVID costs continue to run, because when we move people all around, we have more substantial costs. For example, when we send people to the launch site, we need to keep them in different houses, one by one, to rent cars one by one. We still have some extra office space used at the production site to make sure that we respect distancing. These costs continue to run. We will see what happens in Italy at the end of the so-called emergency period by year-end. According to the current vaccination plan, if requirements will be taken down for distancing and so on, so we can save some costs. This, we don't know yet.
Okay. Thank you. Thank you, Giulio.
The next question is from Ben Heelan with Bank of America. Please go ahead.
Yes. Evening, guys. Thanks for the time. I had two. One, obviously the backlog is improving. You've won this contract. This outlook from Europe seems very good. Can you talk a little bit about the pipeline for international government and international institutions, and how you feel that that is shaping up? I know you talked a little bit about the strong outlook, just if there's anything a bit more specific around the international side of things. Secondly, how are you thinking about the risks around the Vega-C flight and how some of the failures are informing the way you're going about preparing for Vega-C, to make sure there are no issues there? Thank you.
Thank you very much for your questions. On the commercial pipeline, we would like to talk about it a bit qualitatively, for the sensitivity on the commercial side, as you may understand. Just to give you a sense, we see a wealth of opportunities. You mentioned what are you doing with foreign governments and so on. There's a wealth of demand coming from governments from the Middle East and from the Far East, all of which we are monitoring closely. There are some competitive bids, of course, some of them are harsh. On some of them, we think we have a pretty good opportunity in combination with some of the European satellite manufacturers are also pitching for their satellites to be manufactured.
There's more than a handful, let's say, of concrete opportunities that are currently in the pipeline. The value of the pipeline is substantial. The degree of maturation of this pipeline, let's say at least for half of it, is ve ry close to finalization. We hope to be able, within the next six months, to make some announcements. So far, we've been unable to announce new customer contract signatures because out of the difficult periods we have gone through, some customers have waited before signing new contracts. Now that we are reestablishing a credible track record of performance, I think the situation is relaxing a lso because, of course, insurance premiums are more affordable. There's a more comfortable condition, I would say.
Now, on your second question, on the risks of Vega-C, now, very interesting. When we were given a set of recommendations by the European Space Agency to implement in order to improve flight worthiness on Vega, they requested that these provisions be applied also to Vega-C. We had to spend extra time on Vega-C. We had more time to do it, but we had to spend extra engineering efforts to implement new, more rigorous inspection processes on the manufacturing of Vega-C as well.
As a matter of fact, and then some further compliance was split in two tranches to make sure that we would carefully review with not only the European Space Agency, but also with a panel of independent experts, that each and every subsystem on Vega-C is flight worthy, is checked, and X-rayed to make sure that we minimize risks at lift-off. This process is ongoing. Should complete before year-end. The ship to actually send the flight hardware is ready to go on, I believe, on the fourth or fifth of November. Everything is already planned. I think, the feedback I have from the team is that we are exactly on track.
On these things, you can never eliminate surprises, of course. Many things need to go right. We have a substantial change in the prop. It's 70% more performing. It has a completely new control system in different locations. Software is completely upgraded. It's a lot of change. I think we are well prepared for. The buildings for the team to stay there are being readied as we speak. There will be quite a team there between, let's say, December and March. Preparation is at full steam, and we are quite excited.
Okay, great. That's very clear. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one. There is a follow-up question from Martino De Ambroggi with Equita. Please go ahead.
Yes. On the P120C, I don't know if you could provide us an update on the expected run rate. When do you see the full run rate for the P120C?
Okay. Full run rate of P120C, I would expect that we reach between 2023 and 2024. This depends very much on how the progression of new orders will actually unfold in the next few years. We still stay ready for accelerating along this path, if we can. There might be a possibility of that. If not, probably 2024 is a good assumption. With a potential upside to go faster.
Okay. Referring to slide number 17, when you present the estimate of total mass at launch per year doubling in 10 years, could you try to translate it in number of launches? Meanwhile, the multiple launches is becoming a habit. Probably it's less than proportional, the number of launchers required.
At a global level, I guess this is almost impossible to do because now, we will have by then, a different mix of launchers between very large, small, micro. We honestly cannot tell. The reason why we use this measure of mass is because it's a good way to normalize that against the number of flight events. From our point of view, this should sustain, for example, on Ariane, the flight from eight to nine years, something like that. For Vega, maybe by 2030, from five to six, possibly slightly beyond. If we succeed at growing at the same pace of the market, there is where we should be. As a matter of fact, capacity upgrade is one of the things we are now studying very carefully, with the agencies, to make sure that if this scenario unfolds as we expect, we need to be ready with the right capacity upgrade.
Okay. Just the very last on the Italian relaunch plan. It could be possible to see the plan financing the mini launchers or is not taken into consideration for next investments?
Far, what we have heard from the Italian Space Agency does not contain a plan for a mini launcher. It contains a plan for propulsion technologies, but not for our mini launchers.
Okay. Is it abandoned as a program, or you still have it in your pipeline?
It's still there, but we should really see whether this, in the scenario of such a growth in the mass, is truly instrumental to reach our objectives, or it's an opportunistic move that we could do if any of the customers have a very explicit requirement for it. Because what is happening is clearly showing that no one is intending to do micro launchers for the fun of it. The only reason why micro launchers are being developed is because it's an intermediate step to develop a larger one, and this is clear. If you look at what Rocket Lab is currently doing, they have successfully launched Electron with roughly 150 kilograms, and as soon as they got listed, they announced, of course, the preparation of a much larger rocket.
Okay. Thank you.
The next question is from Sandro Geretto, private investor. Please go ahead.
Hello. Good to hear from you. Could you hear me, please?
Yes, very well.
Just three quick questions. Regarding PNRR, do you expect just an order flow or capital contribution for free?
Sorry, I didn't quite understand. You asked about the order flow and?
No. Regarding the PNRR.
Yes.
Okay. Do you expect just a new order flow, an increase in the backlog or any contribution [Non-English content] ? I don't know the-
Okay. I understand. Well, this we will need to see because, as you know, on the Italian Recovery Plan, there is not yet a manual how to execute it. It's something really in the making. The reality is that the overall European Recovery Plan assumes that the vast majority of funds are, as you say, [Non-English content], so n o cash back. Part of this could be done its own. I would say the overwhelming majority will be without any expectation for a cash back. It's the whole intent of the plan to provide these resources to companies to restore their growth path. That's what we expect too.
Okay. Thank you. The second question is, regarding- Okay, around the world, U.S. for sure, companies like Avio have crazy valuation, crazy comparing to Avio. How could you justify just the stock market is just a different stock market, or? If this is the answer, have you ever evaluated the chance to list in U.S. or U.K., to have double listing for your shares?
First of all, why do they have these valuations? This is a very difficult question. First of all, I have two explanations. The first one is that, of course, the U.S. capital market is a much, much larger one than the one we have in Italy, for sure, but in general in Europe. Number 2, U.S. investors are looking at space with a much more long-term perspective than European investors are. All of these companies are presenting their expectation for EBITDA by 2028, and they are valued on that. Whether this expectation is credible or not, I don't know. No one evaluates these companies on what they do in 2022 or 2023.
The third reason why in the U.S. there is such a big valuation is because the government is spending a lot of money for contracts for these companies. They have a huge government demand that is way larger than in Europe. Have we considered listing in the U.S. Why not? Possibly. This is not very much something we can decide on our own as, let's say, management. It's a question that should be reverted back to the shareholders if they want to be listed on a U.S. stock market. For sure, the U.S. stock market have a much larger liquidity, so provide more opportunity for selling if you want to sell, for buying if you want to buy. There's a much, much larger number of investors.
Keep in mind that as of today, we have something like 10% of our shareholder base in the U.S. We should definitely do our best to grow our investor base in the U.S., given the interest. Of course, the pandemic has not made things simple because it's impossible to travel, very difficult to travel to the U.S. at this time. Therefore, we will come back to that as soon as we are in the possibility to do that. We take your point, it's a very interesting remark.
Okay. Thank you very much. The third and last question from me is strategic potentially. Question is regarding Avio and Ariane are the two launchers for the official, let's say, EU government, l et's say. There is any chance to think to put them together? Ariane is your client, and the business is going well till now and for the future, they continue to be your client. The point is, it's not your decision, but it's just shareholder or political decision. In your mind, put Ariane and Avio together. Make sense or not? Apparently, it should be a great combination, but I don't know your opinion.
First of all, let's say that Ariane and Avio are already industrially combined, probably more than you think. We have two industrial joint ventures. We manufacture engines together. We already have extracted most of the synergies we can extract. We perform integration of big motors and casting of propellant in a 50/50 in joint ventures in French Guiana. We split the profits in two. We have optimized costs and so on a 50/50 basis. We are already quite integrated. On commercial activities, we have one company, which is Arianespace, of which I am a board member. They already carry out sales activity for Ariane and for Vega. I don't know what other incremental value we could generate if we were to merge the companies, quite frankly. More than we already have today.
Okay. Thank you very much. You are clear, and thank you for explanations.
Thank you.
Our next question is from Bruno Permutti with Intesa Sanpaolo. Please go ahead.
Good evening. A few questions. First one regard Ariane 6. If you already have a timing for a schedule for the beginning of the launch campaign, or alternatively, what lacks to schedule the beginning of the launch campaign for the new Ariane 6? The second question regards the launch capability. I would like to understand if differences in the launch campaign, in how much time takes the launch campaign, or will take the launch campaign for Vega-C or Ariane 6 at regime, and if there are differences compared to Ariane 5 and Vega. To understand if there is the possibility to increase the number of launches per year. The last question is only a detail on the order backlog at 30 June. The EUR 120 million for the Vega-E contract was already in, or it is something will be recorded in second half?
Okay. Let me start from the first question. The Ariane 6 launch campaign, we do not know exactly when it will start. Prior to the launch campaign, Ariane will start the so-called combined test. They will start to test the engines on the ground to test that everything works. I believe this could start as early as at the beginning of the year or maybe by end of the first quarter. Do not take that as a precise estimate, but more or less. Okay. In terms of the launch capability and frequencies. First of all, on Ariane 6, yes, the launch capacity has been designed to be able to do up to 11 flights every year. The mean time between two launches will be dropped down to, I think, about a week or 10 days, something like that. How do they reach this improvement?
They have built next to the launch pad, a pre-integration building that is very well equipped and automated. Such that while you are launching one rocket, you are already assembling another one. Okay? This operation will certainly allow for a lot more flexibility in the frequency of launch at the Guiana Space Center. In addition to that, the control center has been redesigned and will allow for reconfiguration, at the end of one flight, to prepare for the following one within 48 hours. I think this is also another great software advancement that will enable to increase flight rates. Now, regarding Vega, to improve the launch capability, yes, we need to reduce the mean time between two launches and therefore, the duration of the integration campaign.
Moving from Vega to Vega-C, we already dropped that by five to seven days because we have designed Vega to be largely pre-assembled, let's say, from Europe. We send sub-assemblies, which are already well-equipped, such that when we go at the launch site, we really have to make fewer connections, and less amount of work on site at the launch site. Number 2, we need to work a lot on storage areas at the launch site. For solid rocket motors in particular, we need to increase the amount of storage area. In this way, we will be able to do something similar to Ariane to prepare for integration activities while one launcher is being prepared for flight. This is what we will work on in the next few years.
To move from a theoretical capacity of four to a theoretical capacity of six to seven, it's not a huge and impossible task, but of course, we need to do a number of things. Last, your question on the backlog of Avio, Alessandro can answer.
Hi, Bruno. Vega-E was formally signed beginning of July 2021, but of course, it was acquired by the end of June, so it was factored within the EUR 855 million of backlog end of June.
Okay. Thank you.