Europe’s Satellite Giants Unite to Challenge SpaceX

Airbus, Thales, and Leonardo merge satellite operations in a $7B deal aimed at restoring Europe’s competitiveness in the global space race.

Europe’s leading satellite companies—Airbus, Thales, and Leonardo—have agreed to merge their satellite activities in a strategic move to counter the dominance of SpaceX and China’s emerging mega-constellations. The $7 billion deal, informally dubbed “Project FOMO,” reflects growing urgency across the continent to consolidate resources and regain ground in a rapidly evolving market. This merger brings together Thales Alenia Space, Telespazio, and Airbus’ satellite division, along with smaller assets, in a rare three-way industrial alliance. Analysts say the deal marks a turning point in European space policy, driven by geopolitical tensions and shrinking demand for traditional geostationary satellites.

Strategic Drivers and Industry Pressures

The merger follows years of declining revenues and rising costs, particularly for reprogrammable satellite platforms like Airbus’ OneSat. Internal concerns at Airbus escalated in early 2024, prompting CEO Guillaume Faury to push for a strategic overhaul. Thales, meanwhile, faced overcapacity issues, and both companies recognized the need to compete globally rather than against each other. Russia’s invasion of Ukraine and a widening security gap with the U.S. further accelerated Europe’s push to secure satellite infrastructure with defense applications.

Negotiations were described as difficult, especially around valuations, but participants agreed that consolidation was essential. Political tensions, often present in European aerospace deals, were largely contained by a pragmatic approach. The merger does not include launch capabilities, leaving Europe’s fragmented space launch sector—such as Italy’s departure from Arianespace—unaddressed. Critics argue that the timing may hinder Europe’s ability to deliver on key projects like the IRIS² secure satellite network.

Regulatory Challenges and Sovereignty Goals

Smaller players like Germany’s OHB have voiced concern, warning that the merger could disrupt existing partnerships and bidding processes. Regulatory scrutiny is expected, with competition authorities urged to assess the deal in a global context rather than through a narrow market lens. Proponents argue that the merger will enhance European sovereignty and reduce reliance on non-European providers. The companies hope that a larger market share will help avoid further job cuts beyond the 3,000 already announced in 2024.

Governance details remain vague, though the firms have committed to balanced leadership. How power is distributed among the three partners will likely influence the merger’s long-term success. Industry observers note that consolidation could delay innovation, especially as the new entity is tasked with designing IRIS² over the next two years. The outcome may determine whether Europe can regain competitiveness or fall further behind in the global satellite race.

Outlook and Competitive Landscape

The merger reflects a broader trend of industrial realignment in response to integrated offerings from competitors like SpaceX, which combines launch services, satellite manufacturing, and broadband delivery through Starlink. Europe’s new alliance lacks launch capabilities, potentially limiting its ability to match SpaceX’s cost efficiencies. Nonetheless, the deal is seen as a necessary step to preserve capacity and maintain strategic relevance. Some analysts remain skeptical, citing years of indecision and fragmented investment as barriers to success.