European satellite alliance to take on might of Musk
Airbus, Leonardo and Thales have agreed to merge their satellite operations to create a European joint venture to compete with Elon Musk’s SpaceX.
The three aerospace companies have been in talks for months to form a single company that will employ 25,000 people with annual revenues of €6.5 billion, based on 2024 figures.
The venture is expected to become operational as early as 2027 and draws inspiration from the successful MBDA tie-up, which involved BAE Systems, Leonardo and Airbus combining to design and manufacture missiles.
Airbus will own 35 per cent, while Leonardo and Thales will each take 32.5 per cent stakes. The business will be based in Toulouse in France.
The trio said this structure would deliver savings amounting to “mid-tripledigit millions” of euros in operating income five years after closing. Each home country will keep its existing capabilities, with no site closures planned. Executives said the decision was made in response to the disruption in the satellite sector made by the likes of SpaceX, as well as a big increase in government spending on space, particularly by the United States and China.
The shift from satellites in geostationary orbit, 22,250 miles above Earth, an area where Europe has led, to lowearth orbit, 100 to 1,200 miles above Earth, which has been championed by SpaceX’s Starlink among others, has been another driver behind the merger.
Europe has struggled to compete in the low-earth orbit sector. Both Airbus and Thales Alenia Space, a joint venture by Thales and Leonardo that makes satellites and related equipment, have had to restructure their space businesses, with heavy job losses.
OneWeb, one of Europe’s main competitors to Starlink, has seen its revenues rise over the past year, but Eutelsat, its French owner, has struggled to realise value from the service.
A spokesman for Airbus said: “If you really want to grow at the rate that we see the opportunity for, we think we can achieve much more by scaling and collaborating across Europe, more formally than we do currently.”
The new company will develop technologies and solutions for space infrastructure and services. Launch operations into space, an area in which Europe struggles to compete with the US, will not be part of the effort.
Shares in Leonardo rose by €0.84, or 1.7 per cent, to €51.34 in Milan; in Paris Thales was up by €1.50, or 0.6 per cent, to €260.70, and Airbus rose by €1.45, or 0.7 per cent, to €207.25.
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