Europe’s Aerospace Leaders Unite to Build Rival to Elon Musk’s Starlink

The move marks Europe’s most significant aerospace merger since the formation of missile manufacturer MBDA in 2001. French Finance Minister Roland Lescure said the agreement would “strengthen European sovereignty in a context of intense global competition,” while Italy’s Industry Minister Adolfo Urso called it a key step in fostering “European champions” capable of competing on the world stage, per Reuters.

Codenamed Project Bromo, discussions among the three aerospace groups began last year. The companies have long dominated Europe’s geostationary satellite market but have faced increasing pressure from a new generation of small, low-cost satellites operating in low Earth orbit—chief among them Musk’s Starlink, built by SpaceX.

According to Reuters, Thales Chief Financial Officer Pascal Bouchiat, announcing the company’s quarterly results, praised the partnership and highlighted its link to IRIS², Europe’s planned secure satellite network. “This first development contract for IRIS² doesn’t take away the challenges that the European industry, in particular, is facing,” Bouchiat told reporters.

The combined venture will employ around 25,000 people and generate an estimated €6.5 billion ($7.58 billion) in annual revenue based on 2024 figures. The companies said they expect to achieve “mid-triple-digit” millions of euros in synergies after five years. Markets responded positively to the announcement, with Leonardo shares rising nearly 2%, while Airbus and Thales gained less than 1% in afternoon trading.

Related: EU Regulators Probe SES-Intelsat Deal, Seek Insight on Starlink’s Competitive Threat

Equita analysts noted that the partnership “creates a European leader capable of competing globally and improves the profitability of a business that has struggled in recent years,” according to Reuters. Still, the agreement will undergo up to two years of negotiations involving governments, unions, and the European Commission. The talks will determine the structure of operations across France, Italy, Germany, and the United Kingdom.

The new company will consolidate Thales Alenia Space and Telespazio—existing joint ventures between Thales and Leonardo—alongside portions of Airbus’s space and digital businesses. Ownership will be divided with Airbus holding 35%, and Thales and Leonardo each controlling 32.5%. Sources cited by Reuters said Airbus will receive balancing payments depending on the performance of the assets when the merger is finalized in 2027.

Airbus and Thales have already eliminated a combined 3,000 jobs following losses in their space divisions, but executives said the new venture will prioritize growth rather than further cuts. Italian labor unions have called for transparency and expressed hope that the deal will strengthen the country’s competitiveness in the global space industry.

French satellite operator Eutelsat welcomed the merger but urged vigilance to ensure the efficiencies benefit customers, per Reuters. The deal could also face resistance from smaller rivals such as Germany’s OHB, which some French lawmakers suggested could absorb certain assets from the merged group.

Sources familiar with the discussions said the companies overcame disagreements over governance and valuation after tensions during the summer. Executives stressed that the new organization would avoid rotating leadership or nationality-based appointments—issues that have historically caused friction in Europe’s aerospace sector, particularly at Airbus.

Source: Reuters