Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Airbus and Thales have held exploratory talks about merging some of their space activities in what could prove a key test of Europe’s appetite for consolidation in an increasingly competitive and strategic sector.
The talks, which remain at an early stage, are focused on the companies’ satellite activities, according to two people familiar with the situation.
Thales’ space business, Thales Alenia Space, and Airbus are Europe’s largest manufacturers of satellites for communication, navigation and surveillance. Leonardo, Italy’s defence champion, holds a 33 per cent stake in Thales Alenia.
The aim, said one of the people, would be to create a pan-European alliance in space similar to that of MBDA, the region’s missile champion. MBDA’s successful cross-border manufacturing and one-company ethos has been held up as a model for the type of defence industry collaboration needed for Europe in the wake of Russia’s invasion of Ukraine.
The conflict and the extensive use of satellites by both sides has similarly underlined how vital space has become to individual nations’ security.
“It would be a test of just how strategic space is for Europe,” said one of the people.
Any agreement would, however, face significant regulatory and antitrust hurdles, the people cautioned, noting that Airbus and Thales had explored similar tie-ups in recent years, notably most recently in 2019.
The French, German and Italian governments would need to approve an alliance, as would the European Commission. The current volatile political situation in France would also probably prove a stumbling block, according to one of the people.
The talks come as both Airbus and Thales are under pressure to stem losses at their respective space businesses.
Demand for their large geostationary satellites has fallen, while the market for broadband and other services from smaller, cheaper spacecraft in low Earth orbit has soared. Elon Musk’s Starlink now operates the world’s largest constellation of broadband satellites.
Airbus said last month it would record a charge of about €900mn in the first half of the year related to its space systems business. The company said at the time it would “evaluate all strategic options such as potential restructuring, co-operation models, portfolio review and M&A options”.
Thales has similarly flagged pressures in its space unit, saying in March that it would cut some 1,300 jobs because of a reduction in demand for telecom satellites.
The talks are separate to the restructurings under way at both companies which remain a priority, according to the people familiar with the situation.
Airbus, Thales and Leonardo all declined to comment on the talks which were first reported by La Tribune.
Credit: Source link
