Europe's three biggest satellite makers have committed to signing a binding framework agreement for their long-planned merger before the end of 2026, setting up a European Commission review that could clear the way for a single champion by mid-2027. Airbus Defence and Space, France's Thales and Italy's Leonardo confirmed the timetable this week, positioning the combined entity, known as Project Bromo, to compete directly with SpaceX and Amazon's Project Kuiper in the commercial and military satellite markets.
From years of losses to a profit inflection
The merger talks have been driven as much by financial necessity as by strategic ambition. Airbus Defence and Space, the largest of the three, recorded losses in the billions for several consecutive years before breaking even recently. Michael Schöllhorn, who heads the division, told investors that the unit earned roughly 800 million euro in 2025 and could reach 1.3 billion euro by 2029. Thales and Leonardo followed a similar trajectory, each posting heavy losses in their space divisions as recently as 2022 before order books began to swell.
The turnaround coincides with a step-change in European government procurement. After years of under-investment, national defence ministries are ordering communications and reconnaissance satellites at unprecedented rates. The German Bundeswehr alone has earmarked 35 billion euro for space technology over the coming years, a figure that dwarfs previous spending envelopes and has flowed directly into the order books of all three manufacturers.
Government spending reshapes the market
The surge in public expenditure is not limited to Germany. France's 2024-2030 military programming law allocates significant funding to space-based intelligence and secure communications, while Italy has expanded its contributions to European Space Agency programmes and national satellite constellations. The combined effect has given Airbus, Thales and Leonardo a visibility on future revenues that did not exist five years ago, allowing them to justify the integration costs and restructuring charges a merger entails.
Yet the improved outlook has not deterred the consolidation push. Lorenzo Mariani, Leonardo's chief executive, told Handelsblatt that Project Bromo will be submitted to the European Commission in Brussels despite the stronger order intake, confirming that the strategic logic, achieving scale to rival US mega-constellations, remains the primary driver. The three companies argue that only a merged entity can sustain the investment required for next-generation low-earth-orbit constellations, reusable launch integration and sovereign secure communications.
Project Bromo timeline and structure
Discussions among the three groups have been underway for several years under the codename Project Bromo. The venture was officially announced in 2025, but the legally binding framework contract, the document that locks in governance, asset contributions and shareholding, has yet to be signed. The companies now say that will happen by December 2026. Once signed, the dossier will be formally notified to the European Commission's competition directorate, triggering a Phase I review that could extend to a full Phase II investigation if remedies are required.
The Commission's decision is expected by mid-2027. If approved, the joint venture would combine the satellite manufacturing, payload and ground-segment activities of all three parents, creating a company with revenues likely exceeding 5 billion euro annually and a backlog stretching well into the 2030s. The parents would retain stakes proportionate to the assets contributed, though the exact split has not been disclosed.
Competition concerns from smaller German firms
The merger has drawn criticism from mid-sized German space companies, which argue that a single dominant prime contractor would squeeze subcontractors and reduce innovation. OHB, the Bremen-based satellite builder, has warned privately that a consolidated Airbus-Thales-Leonardo entity would control the vast majority of European institutional satellite contracts, leaving little room for independent bidders. The German Federal Cartel Office has also been briefed on the potential market concentration, though the primary authority rests with Brussels because the turnover thresholds trigger the EU merger regulation.
European Commissioner for Competition Teresa Ribera's team will assess whether the merger creates a dominant position in specific product markets, geostationary telecommunications satellites, Earth observation platforms, and secure government communications, and whether remedies such as divestitures or access commitments are needed. The three companies have begun preparing behavioural remedies, including commitments to maintain separate bidding teams for certain institutional tenders for a transitional period.
Strategic rationale versus industrial reality
The strategic case rests on the emergence of US mega-constellations. SpaceX's Starlink now operates more than 6,000 satellites, with Amazon's Kuiper authorised for 3,236. European institutional customers, the EU's IRIS² secure connectivity programme, NATO's space strategy, and national defence ministries, require sovereign alternatives that can match the scale, refresh rate and cost structure of those systems. No single European company currently has the production capacity or financial firepower to bid for such programmes alone.
But the industrial integration challenge is formidable. The three groups operate distinct satellite platforms, Airbus's Eurostar Neo, Thales's Spacebus Neo, and Leonardo's contributions through Thales Alenia Space, its joint venture with Thales. Harmonising supply chains, IT systems and engineering cultures across French, German and Italian sites will take years. Previous European aerospace mergers, such as the creation of MBDA or the Airbus commercial aircraft integration, suggest that cost synergies often arrive later and smaller than projected.
People mentioned
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Michael Schöllhorn
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Lorenzo Mariani
Organisations
Airbus Defence and Space · Thales · Leonardo · European Commission · Bundeswehr
