European Aerospace Giants Forge Satellite Alliance to Challenge Starlink Dominance

Major European Space Consolidation

Three of Europe’s largest aerospace and defense companies have officially agreed to merge their space operations, according to reports, creating a new entity designed to compete with Elon Musk’s Starlink and other global satellite constellations. Airbus, Leonardo and Thales signed a Memorandum of Understanding that would combine their satellite manufacturing and space services businesses into a single organization projected to generate approximately €6.5 billion in annual revenue.

Major European Space Consolidation
Strategic Response to Global Competition
Corporate Contributions and Structure
Operational Timeline and Workforce
European Strategic Autonomy
Market Context and Challenges

Strategic Response to Global Competition

The merger represents a strategic response to what analysts suggest is increasing pressure from new space competitors, particularly SpaceX’s Starlink constellation of low Earth orbit satellites. Sources indicate that European companies have struggled to compete in an era of smaller, cheaper satellites, with Reuters reporting that the three companies have already cut approximately 3,000 space-related jobs collectively. The new entity aims to address these challenges through consolidation and shared expertise.

Corporate Contributions and Structure

According to the joint statement, each company will contribute significant assets to the new venture. France’s Airbus will bring its Space Systems and Space Digital businesses from Airbus Defence and Space, while Italy’s Leonardo will contribute its Space Division including shares in Telespazio and Thales Alenia Space. Dutch company Thales will add its shares in Thales Alenia Space, Telespazio, and Thales SESO. Ownership will be distributed with Airbus holding 35%, and Leonardo and Thales each owning 32.5% stakes.

Operational Timeline and Workforce

The report states that the new company could become operational by 2027, pending regulatory approvals from the European Union. The combined entity would employ approximately 25,000 people across Europe and would begin operations with what the companies describe as “an order backlog representing more than three years of projected sales.” The statement mentions that discussions with worker unions are underway, though it remains unclear whether the merger will result in additional job reductions.

European Strategic Autonomy

The partnership aligns with broader European government ambitions to strengthen industrial and technological independence in the space domain. The three CEOs – Guillaume Faury of Airbus, Roberto Cingolani of Leonardo, and Patrice Caine of Thales – stated in their joint announcement that the merger “ensures Europe’s autonomy across the strategic space domain and its many applications.” They emphasized that pooling talent, resources, and R&D capabilities would accelerate innovation and deliver greater value to customers.

Market Context and Challenges

The European space industry faces significant challenges from rapidly evolving satellite technologies and new business models pioneered by companies like SpaceX. The memorandum of understanding, a non-binding agreement that typically precedes formal contracts, signals the companies’ commitment to creating a more competitive European presence in the global space market. If successful, the merger could potentially reshape the satellite manufacturing landscape and provide Europe with enhanced capabilities in satellite communications and space services.