PARIS (Reuters) - Companies launching space satellites worth hundreds of millions of dollars are looking with caution to the first commercial launch of western Europe's new generation Ariane-5 rocket on Friday.

Ariane-5, scheduled to blast off on December 10 from French Guiana, was due initially to be handed over to the Paris-based Arianespace consortium for commercial operations in early 1997 after its second test flight.

But its first launch in June 1996 ended in a spectacular failure when the rocket exploded 37 seconds after lift-off from the European Space Agency (ESA) launch center in Kourou, French Guiana on the northeast coast of South America.

Memories of that disaster tarnished the rocket's image and have made engineers somewhat wary of the Ariane 5 until they see it fly a few more times.

Dumesmil admitted the assessment of a rocket's reliability could be quite subjective, "in particular when a given launch vehicle has on record a small number of (successful) flights.

"Clearly the Ariane-4 and Atlas families have a long flight record and have demonstrated a high level of reliability."

Two test flights since the disaster have been successful, but the rocket has does not have the track record of the workhorse Ariane-4 -- 50 consecutive successful flights so far.

For the Washington-based Intelsat organization, launch reliability is also a determining factor.

"In Arianespace's case, there must be three successful Ariane-5 launches, otherwise an Ariane-4 has to be provided for our use,'' said Terry Edwards of Intelsat.

Difficult road to commercialization

Ariane-5 was declared fully qualified for commercial flight earlier this year but its commercial debut was delayed because satellite manufacturers could not deliver their payloads.

Ariane-4 launches were also held up, with none between April and late August because no satellites were ready for launch.

Technical problems with the new satellites held up the launching schedule again.

Since August, there have been five flights with three launches scheduled for December.

"This year has been difficult for us because of the satellite availability problem,'' said Arianespace President Jean-Marie Luton.

"Ariane-5s should be launched five or six times next year. It should really be an operational launcher and no longer a launcher which waits for its qualification and waits for its satellites.''

First commercial flight?

Ariane-5's December payload is the XMM space telescope, a $700 million project financed by European Space Agency (ESA) member states. The ESA will pay Arianespace $154 million to launch the 3.9 ton satellite into orbit.

ESA officials said only Ariane-5 was considered for this mission and its financing comes entirely from government organizations in ESA's member states.

ESA member states have spent $10 billion developing Ariane-5 since its conception in the mid-1980s.

This close relationship has led to comments in the industry that the XMM launch was not really a commercial flight.

But Arianespace officials scoff at the charge.

"Our customer is ESA and they are paying us to launch this satellite,'' an Arianespace spokesman said.