European Satellite Makers Unite to Challenge Starlink

Airbus, Thales and Leonardo plan joint venture to consolidate satellite operations and boost competitiveness.

Three major European aerospace firms—Airbus, Thales and Leonardo—have reached a preliminary agreement to merge their satellite manufacturing operations. The move comes in response to growing pressure from low-cost satellite providers, particularly Elon Musk’s Starlink. Subject to regulatory approval, the new entity is expected to begin operations in 2027 and aims to streamline production and services across the continent. With combined annual revenues of €6.5 billion and a workforce of 25,000, the venture seeks to reinforce Europe’s strategic autonomy in space.

Strategic Consolidation and Governance

The joint venture will be governed equally, with Airbus holding a 35% stake and Thales and Leonardo each owning 32.5%. This balanced structure is designed to avoid dominance by any single partner and ensure collaborative decision-making. Talks began last year under the codename “Project Bromo,” inspired by the cooperative model of missile manufacturer MBDA. Despite past tensions among the companies, the deal was finalized after resolving disagreements over valuation and governance.

European regulators, who have previously resisted consolidation in the aerospace sector, must still approve the merger. If successful, the venture could generate hundreds of millions of euros in annual operating synergies within five years. The CEOs of the three firms emphasized that the merger supports Europe’s independence in space-related technologies. By pooling resources, the companies hope to better compete with agile, low-Earth orbit satellite providers.

Operational Scope and Workforce Impact

The new entity will integrate the manufacturing and service divisions of Thales Alenia Space and Telespazio—joint ventures between Thales and Leonardo—as well as Airbus’s space and digital units. Additional space activities from Leonardo and Thales SESO will also be included. While the companies have already reduced their space workforce by approximately 3,000 jobs, no further layoffs were announced. Union consultations are planned to address workforce concerns and ensure a smooth transition.

The merger reflects a shift in strategy as traditional satellite makers adapt to market changes. Demand for large geostationary satellites has declined in favor of smaller, cost-effective alternatives. By consolidating operations, the firms aim to reduce duplication and improve efficiency. The venture also positions Europe to maintain a competitive edge in global satellite manufacturing.

Broader Industry Context and Future Outlook

The satellite industry has undergone rapid transformation, driven by technological advances and new entrants offering low-cost solutions. Starlink’s expansion has disrupted traditional models, prompting established players to rethink their approach. European firms have struggled to match the pace and scale of these developments, making collaboration a practical response. The new venture could serve as a blueprint for future consolidation in other segments of the aerospace industry.

Efforts to replicate MBDA’s cooperative structure suggest a growing appetite for pan-European industrial partnerships. Such models offer resilience and shared innovation, especially in sectors critical to national security and infrastructure. The merger’s success will depend on regulatory approval and effective integration of diverse corporate cultures. If realized, the venture may help Europe reclaim leadership in satellite technology.