Europe’s leading aerospace companies — Airbus, Thales, and Leonardo — have reached a long-anticipated agreement to merge their satellite manufacturing activities in a bid to strengthen Europe’s position in the rapidly evolving space communications market dominated by Elon Musk’s Starlink, Reuters reported.
The agreement, announced on Thursday after months of negotiations, marks one of the most ambitious industrial integrations in Europe’s space sector to date. The deal seeks to consolidate the region’s fragmented satellite industry and boost competitiveness against the growing constellation operators reshaping global connectivity.
A new European space champion
The three groups will pool their loss-making satellite manufacturing divisions into a single entity, expected to become operational in 2027, pending approval by European competition and regulatory authorities. The new venture — yet to be named — will employ approximately 25,000 people across Europe and generate annual revenues of €6.5 billion, based on 2024 figures.
Under the agreed structure, Airbus will hold a 35% stake, while Thales and Leonardo will each control 32.5%, ensuring a balanced governance model under joint control. The combination is projected to generate mid-triple-digit millions of euros in annual operating synergies within five years.
Strategic rationale and competitive pressures
Codenamed “Project Bromo,” the merger is modeled on the cooperative structure of MBDA, Europe’s integrated missile manufacturer jointly owned by Airbus, Leonardo, and BAE Systems. Similar to MBDA’s success in consolidating Europe’s defense capabilities, the new space entity is designed to ensure Europe’s strategic autonomy in the space domain while improving industrial efficiency.
For decades, Europe’s satellite makers have competed fiercely to design and build large, high-value geostationary satellites. However, the rise of low-cost, small satellites in low Earth orbit (LEO) — pioneered by Starlink and other U.S. players — has upended traditional business models. The resulting price pressure and technological disruption have eroded margins and led to a wave of cost-cutting measures, including approximately 3,000 job reductions across the European space industry in recent years.
In a joint statement, the chief executives of Airbus, Thales, and Leonardo said the merger will help European governments “ensure Europe’s autonomy across the strategic space domain,” a goal increasingly seen as vital amid intensifying global competition and geopolitical tensions affecting satellite communications and defense.
Governance challenges and regulatory hurdles
Negotiations over the merger reportedly stalled during the summer due to disagreements over valuation and governance, according to sources cited by Reuters. The eventual breakthrough reflects a delicate balance of influence among the three partners, each with a history of complex cooperation and competition in joint ventures such as Thales Alenia Space and Telespazio.
The new entity will combine these two existing joint ventures — between Thales and Leonardo — with various Airbus space and digital businesses, along with the remaining space activities owned by Leonardo and Thales SESO. While the companies made no mention of additional job cuts, they confirmed that labor unions will be consulted as the integration progresses.
European integration in the space race
The planned merger represents a major step toward industrial consolidation in Europe’s strategic technology sectors, echoing broader EU efforts to build scale and resilience in areas such as defense, semiconductors, and renewable energy.
If approved, the alliance could reshape Europe’s satellite manufacturing landscape, allowing the continent to better compete not only with Starlink but also with other global players such as Amazon’s Project Kuiper, OneWeb, and China’s Guowang constellation program.
For the European Commission, the deal poses a familiar dilemma: balancing the need for industrial sovereignty and global competitiveness against the imperative to preserve effective competition within Europe. Given Brussels’ past reluctance to approve industrial mergers involving major aerospace players, the transaction’s review will likely serve as a critical test of the EU’s evolving industrial policy in strategic sectors.
