European Aerospace Trio Consolidates Space Assets in Project Bromo

European Aerospace Trio Consolidates Space Assets in Project Bromo

Airbus, Thales and Leonardo signed a memorandum of understanding Oct. 23 to combine their space businesses into a single joint venture, marking Europe's largest aerospace consolidation since the creation of missile manufacturer MBDA in 2001.

The new company, internally codenamed Project Bromo, would employ approximately 25,000 people across Europe and generate €6.5 billion ($7.5 billion) in annual revenue based on 2024 figures. Airbus will hold a 35% stake, while Leonardo and Thales will each control 32.5%.

The venture combines Airbus Defence and Space's Space Systems and Space Digital divisions, Leonardo's space division including its stakes in Telespazio and Thales Alenia Space, plus Thales' shares in those joint ventures and optics company Thales SESO.

Financial Distress Drives Consolidation

Airbus reported $1.5 billion in charges in 2023 due to underperforming space contracts and announced 2,000 job cuts in its defense and space branch, while Thales Alenia Space reduced more than 1,000 positions last year.

Analysis from industry observers suggests the merger represents a strategic retreat rather than an offensive move against competitors. Despite official statements emphasizing competition with global players, financial documents reveal Airbus is contributing approximately 53% of expected revenues while receiving only a 35% stake—indicating what analysts characterize as a partial disengagement from the sector.

According to CFDT Airbus Defence & Space, France's influential trade union, the merger stems from "organizational failures and serious cost and risk underestimations" on programs like EGNOS V3 and OneSat, rather than competitive pressure from Starlink. The union noted that bidding wars between Airbus Defence and Space and Thales Alenia Space led directly to excessive risk-taking.

ESA Assessing Competitive Implications

European Space Agency Director General Josef Aschbacher stated the merger would "change the landscape," noting that ESA is assessing implications for the agency with findings expected early next year to guide future industrial policy and procurement decisions.

"Project Bromo is a sovereignty play," Caleb Henry, research director at Quilty Space, told Breaking Defense. "Merging Europe's two largest satellite manufacturers, plus Leonardo's space business, would have been viewed as severely anti-competitive a decade ago. Today the greatest perceived competitive risk isn't a European monopoly, it's getting left behind by the U.S. and China".

Regulatory Hurdles Ahead

The companies face up to two years of regulatory approval processes involving European Commission antitrust review, national security clearances in France, Italy and Germany, and coordination with state shareholders in all three parent companies.

German satellite manufacturer OHB fired the first shot in what could become a regulatory battle, with OHB leadership telling Boersen-Zeitung the merger represents "a threat to us." The merger trio is urging European competition authorities to assess market concentration through a global rather than regional lens.

French Finance Minister Roland Lescure characterized the preliminary deal as strengthening "European sovereignty in a context of intense global competition".

New Competitive Dynamics

Industry analysts suggest the consolidation may ironically create opportunities for smaller competitors. OHB, long a secondary player in Europe's space hardware sector, could position itself as a more agile alternative, with ESA and national space agencies potentially adopting procurement strategies to preserve supplier diversity.

The merger's several-year integration process could enable new entrants to target niche markets the combined entity proves too unwieldy to serve effectively. The companies expect the merger to create hundreds of millions of euros in operational synergies within five years, though questions remain about workforce implications beyond the 3,000 positions already eliminated in 2024.

The new venture aims to launch operations in 2027, subject to regulatory approval. Despite promises of no immediate job losses or site closures, labor unions across Europe remain skeptical about long-term employment prospects.

IRIS2 and Strategic Programs

Both Airbus and Thales are participating in the European Commission and ESA-funded Infrastructure for Resilience, Interconnectivity and Security by Satellite (IRIS2) program, a planned low Earth orbit communications constellation. However, analysts note IRIS2's modest scale may prove insufficient to fully utilize the merged entity's production capacity.

The joint CEOs—Guillaume Faury of Airbus, Roberto Cingolani of Leonardo, and Patrice Caine of Thales—stated in their announcement that the partnership "embodies our shared vision to build a stronger and more competitive European presence in an increasingly dynamic global space market."

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