Airbus, Thales, Leonardo announce space merger to rival Musk’s Starlink

Airbus, Leonardo and Thales announced Thursday that they will combine their satellite and space activities to form a “leading European player in space,” as the region looks for a homegrown rival to Elon Musk’s Starlink.

The companies — each a heavyweight in the aerospace and defense sector in their own right — said the joint venture would develop and build, “a comprehensive portfolio of complementary technologies and end-to-end solutions, from space infrastructure to services.” The development of space launchers will be excluded from the new company’s operations.

The combined entity is expected to generate mid-triple-digit million euros in annual synergies on operating income within five years of closing, and it’s set to employ 25,000 people across Europe.

European defense stocks jumped on Thursday, with the regional Stoxx Aerospace and Defense index adding 0.9%. Leonardo shares were last seen trading 1.8% higher, while Thales gained 0.6% and Airbus was up by 0.2%.

Airbus will be the majority owner of the new joint venture with a 35% stake, and will contribute its Space Systems and Space Digital businesses from its defense and space division. Leonardo and Thales will each hold a 32.5% stake in the new company.

Leonardo’s contribution will be its entire Space division, including its shares in Rome-based spaceflight services firm Telespazio and Thales Alenia Space, an existing joint venture with Thales. Thales will also add its stake in Thales Alenia Space to the new company, as well as its Thales SESO operation. 

The firms said the new space entity would be “a unified, integrated and resilient European space player, with the critical mass to compete globally and grow on the export markets.”

“This new company also intends to serve as the trusted partner for developing and implementing national sovereign space programs,” they added.

Touting the joint venture as “a pivotal milestone for Europe’s space industry,” the chief executies of the firms said in a joint statement that it would help “build a stronger and more competitive European presence in an increasingly dynamic global space market.” 

They stressed that the move would allow Europe to retain control over its domestic space operations, as regional governments look to pour cash into their aerospace and defense capabilities. 

Europe has been looking for an alternative to Starlink, the satellite broadband service owned by Musk’s space exploration firm SpaceX that currently dominates the sector and has a vast presence across Europe.

Starlink has played a critical role in Ukraine’s war effort since Russia’s full-scale invasion of the country in 2022, but issues have reportedly arisen in the past with communication blackouts. Earlier this year, it was rumored that Eutelsat — the French firm that merged with Britain’s OneWeb in 2023 — was in the running to replace Starlink in Ukraine. 

French President Emmanuel Macron, meanwhile, has backed the concept of a European satellite champion, arguing in a speech over the summer that “space has in some way become a gauge of international power.” Meanwhile, Italian lawmakers warned against involving SpaceX in an update to the country’s satellite program back in July.

Speculation that Airbus, Leonardo and Thales would join forces on satellite functions has been building for some time. Back in April, Leonardo CEO Roberto Cingolani told CNBC he was hopeful the alliance would come to fruition in the coming months.

He said at the time that the joint venture would not be specifically designed to challenge Starlink, but to provide a European alternative.

Eutelsat has long been vying to become the regional rival to Musk’s company. However, its fleet of satellites is vastly overshadowed by Starlink’s, with the latter launching its 10,000^th satellite into orbit earlier this week. 

David Barker, investment manager of GAM’s European equity team, told CNBC that the joint venture announced on Thursday was “the first tangible evidence of Europe addressing its waning technological sovereignty since the start of the second Trump administration.”

“Prior to [this], Europe competed against itself, through three subscale companies against the growing dominance of SpaceX,” he said. “We see this as a positive step towards re-establishing Europe’s space industry as a global force and also a positive signal that the European project may be able to re-assert itself where it has failed in other areas such as cross-border banking, capital markets and defence consolidation.” 

Meanwhile, Michael Field, chief equity strategist at Morningstar, told CNBC the move was “another step in the right direction for Europe.” 

“For Leonardo, Thales, and Airbus, space is a relatively small part of their businesses, but joining forces certainly provides more clout to compete in the global market,” he said. “We remain bullish on the aerospace and defense sector in general, with four-star ratings on both Thales and Leonardo.” 

— CNBC’s Ryan Browne and Silvia Amaro contributed to this report.