The Franco-Italian axis of Europe’s space sector strengthens again
- UCL Law for All Society
- Oct 31
- 4 min read
By Stephane Duponcheele
Last Thursday, three of Europe’s premier aerospace champions, Airbus, Leonardo, and Thales, announced a preliminary agreement to merge their space divisions. The goal of this ambitious project is the creation of a European satellite champion capable of competing with the likes of SpaceX on the global stage. The planned venture, valued at around €6.5 billion and employing roughly 25,000 people across the continent, aims to consolidate Europe’s satellite and space systems manufacturing under one powerful entity.
Europe’s space industry today faces mounting pressure amid intensifying global competition. The rise of Elon Musk’s SpaceX and Starlink has dramatically reshaped the global launch and satellite markets, exposing the structural weaknesses of Europe’s fragmented and often bureaucratic space ecosystem, with an EU space act only recently being proposed.
As highlighted in the 2024 Draghi report on European competitiveness, the sector encapsulates the bloc’s broader struggle to maintain technological and industrial leadership in the face of agile, well-funded rivals. While the Director General of the European Space Agency has urged Europe to “raise its ambition” in space, the economic realities thus far are nothing but sobering. Public investment in the continent’s space programs stood at approximately USD 15 billion in 2023—barely one-fifth of the USD 73 billion spent by the United States and soon to be surpassed by China, whose spending is projected to reach USD 20 billion by 2030.
Despite Europe’s world-class space-related expertise, it is beginning to lose ground. Nowhere is this decline more visible than in Arianespace, once a dominant player in global launch services with a 50 percent market share two decades ago. Today, it desperately struggles to compete with SpaceX’s lower-cost, reusable rockets.
Given this context, it is clear to see why news of the merger has been taken as a breath of fresh air in the industry. A merger between the joint space ventures of Thales and Leonardo — Thales Alenia Space and Telespazio — and Airbus’s satellite business could represent a much-needed turning point for Europe’s satellite and space systems industry, addressing several of the structural weaknesses that have left it trailing its global competitors.
For Europe, an increasingly transactional world in which market power is exploited for political leverage, makes reliance on foreign satellite giants risky. In a market increasingly dominated by large, vertically integrated players like SpaceX and China’s CASC, Europe’s fragmented industrial landscape has in the past hindered efficiency, investment, and innovation. By consolidating three of its most significant space manufacturers into a single champion, Europe could gain the scale, coherence, and strategic direction necessary to truly compete globally again.
The division of ownership amongst the three aerospace giants will be roughly equal, with Airbus owning a 35 percent stake in the company, followed by Italy’s Leonardo and France’s Thales who will own 32.5 percent each. In addition, there will be a yet-to-be named CEO and managing directors for each country, as reported by Politico.
The proposed company, to be headquartered in the European space capital of Toulouse, would also cement the dominance of France and Italy within Europe’s space ecosystem, a trend that has been steadily advancing over the past decade. Anchored by the aforementioned Franco-Italian “Space Alliance” between Thales and Leonardo, these two nations already control a significant share of Europe’s satellite manufacturing, launch, and defence-related space capabilities. Together, they employ tens of thousands across a combined €6.5 billion business and are leading flagship programs such as Athena-Fidus, SICRAL-2, and MUSIS, as well as industrial initiatives like Space Factory 4.0 and the new 21,000 m² satellite production plant near Rome.
While these projects underscore technological depth and industrial agility, they have also stirred unease in Berlin and other European capitals, particularly due to the emerging French-Italian axis dominating Europe’s strategic space assets. Germany, in particular, has voiced concern that the concentration of leadership and funding in Paris and Rome could marginalise other European players, potentially skewing future ESA and EU programs towards a southern European industrial core, a shift that Berlin, fearful of its own waning industrial power, may take to heart.
Germany’s space industry, though technologically capable and supported by a strong engineering base, is even more fragmented and undercapitalised than its French and Italian counterparts. Unlike France’s CNES or Italy’s ASI, Germany lacks a single, powerful national space agency capable of steering industrial strategy or coordinating large-scale public investment. Its sector is distributed across a network of mid-sized firms and research institutions, with limited vertical integration and few globally competitive primes. While Airbus Defence and Space’s German division, OHB and similar companies play important roles in satellite production and ESA programs, they operate within a policy framework that prioritises research and incremental innovation over industrial consolidation and market competitiveness.
This structural weakness leaves Germany vulnerable to being overshadowed by a merged Franco-Italian powerhouse. The proposed Thales–Leonardo–Airbus satellite company would most likely command the bulk of Europe’s satellite manufacturing capacity, workforce, and R&D funding. This, in turn, anticipates a centre of gravity in Paris and Rome that might marginalise German firms within ESA procurement cycles and EU-funded projects.
The merger will require approval from the European Commission’s powerful competition directorate, which now faces a delicate balancing act between its strict antitrust principles and Commission President Ursula von der Leyen’s broader ambition to cultivate European industrial champions. Long accustomed to judging mergers through a narrow lens of market concentration and consumer impact, the directorate is under growing pressure to adapt its approach as to reflect the bloc’s strategic priorities, namely: fostering growth, technological sovereignty, and global competitiveness against U.S. and Chinese rivals.
In their lobbying efforts, Airbus, Thales, and Leonardo are urging regulators to adopt a more expansive definition of competition, one that recognises space as a global market rather than a European one. The companies argue that consolidation is essential to bolster Europe’s industrial resilience and strategic autonomy in a sector increasingly dominated by non-European powers. The Commission, for its part, has already scheduled a review of its merger control framework for next year, a process that could determine whether this landmark tie-up becomes a symbol of renewed European ambition or another casualty of regulatory caution.
Sources:
Edited by Artyom Timofeev
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