A view of Europe from space. Photo: ESA/NASA

A new era in European space kicked off last week thanks to one of the biggest pieces of consolidation in the industry in recent history. Airbus, Leonardo and Thales signed a Memorandum of Understanding (MoU) to create a leading European player in space.

The merger will combine the Airbus Space Systems and Space Digital businesses, along with Leonardo’s Space Division, including its shares in Telespazio and Thales Alenia Space, as well as the Thales shares in Thales Alenia Space, Telespazio, and Thales SESO.

In this roundtable, Via Satellite spoke to Mark Boggett, CEO of Seraphim; Carla Filotico, partner and managing director of Novaspace; and Pravin Pradeep, senior consultant for Aerospace, Defense, & Space with Frost & Sullivan, about the ramifications of the deal.

VIA SATELLITE: Leonardo/Airbus/Thales are creating one huge European space company with 25,000 employees, covering a number of areas within space. What is your initial reaction to this deal — do you believe it makes strategic sense?

Boggett: This joint venture is a strategic step toward strengthening European space sovereignty. By consolidating capabilities across Airbus, Leonardo, and Thales, Europe can create a single, robust platform to deliver larger and more ambitious programs. Strategically, it makes sense because it allows European industry to compete more effectively on a global stage, particularly as U.S. companies continue to expand their presence in Europe. As we highlighted in our Seraphim white paper earlier this year, the path to addressing Europe’s defense deficit needs to focus on procuring the best capability available at the earliest opportunity, rather than just funneling money into national champions.

Filotico: My reaction is that this move is both bold and necessary and fully aligned with the direction Mario Draghi set out in his competitiveness report about the need to facilitate the creation of ‘European champions’ — big companies able to compete with U.S. and Chinese giants. This merger between Airbus, Leonardo, and Thales tackles exactly that, aims to creating scale, coherence, and speed. The deal also responds to the need to optimize costs, improve margins, and compete globally. Synergies in engineering, manufacturing, and project management, along with expanded commercial reach, make this merger attractive. If Europe wants to secure space non-dependency and create a ‘single market,’ then it needs a European competitive industry capable to deliver at a fair value.

Pradeep: My initial reaction is that this merger is a timely and strategically sound response to a changing market. Europe’s space industry has been fragmented and under pressure. Its leading satellite manufacturers have struggled in recent years, facing financial losses, delayed programs, and mounting competition. Airbus’s space division, for instance, has suffered ‘crippling losses’ and workforce reductions, while the Thales-Leonardo joint ventures, once pioneers in commercial space, have been dwarfed by the rise of and the shift toward lower-cost, high-cadence Low-Earth Orbit (LEO) constellations.

From left: Mark Boggett, Carla Filotico, and Pravin Pradeep

VIA SATELLITE: Do you think Europe needs a player like this to compete with the likes of SpaceX and Amazon on the global stage?

Boggett: Europe needs players of this scale to compete globally, but it’s not just about size. The joint venture can anchor a broader ecosystem, enabling startups and smaller innovative companies to thrive alongside the primes. This layered approach ensures Europe can compete with the likes of SpaceX and Amazon while also fostering homegrown innovation.

Filotico: Absolutely. Space industry competition is global: it’s about scale, integration, and speed. The U.S. and China already operate through consolidated industrial ecosystems. Europe needs a comparable player to protect its technological sovereignty and remain relevant. What would have been the alternative scenario? This new entity gives Europe the chance to retain important strategic capabilities and to create mass and structure to compete on equal footing in key domains like satellite communications, Earth Observation and satellite navigation both for civil, military and commercial markets.

Pradeep: Europe’s capabilities pale in scale and speed next to SpaceX and (soon) Amazon. Europe’s strength lies in its high-quality engineering and established satellite expertise – Airbus and Thales Alenia have built some of the world’s most advanced satellites – and in the breadth of its companies (no single point of failure). But that very breadth can be a weakness against the monolithic efficiency of a SpaceX. The new joint venture combining Airbus, Thales, and Leonardo’s space businesses is explicitly meant to counter the runaway growth of Starlink by uniting Europe’s fragmented industry.

VIA SATELLITE: What do you see as the real benefits to the European space industry?

Boggett: The main benefits are twofold: first, the ability to deliver major, complex programs with greater efficiency; second, the potential to create a collaborative ecosystem where smaller companies and startups can access opportunities, investment, and guidance. By consolidating scale while remaining open to innovation, this kind of scale can act as a catalyst for the entire European space sector.

Filotico: For the other players in the European industry, like OHB in Germany, GMV in Spain, the emergence of a stronger oligopoly presents both opportunities and challenges. While they may benefit from increased stability and scale in the ecosystem, they will also need to reassess their strategic positioning to remain competitive. At the Tier 1 and Tier 2 supply chain levels, this shift may trigger further consolidation and integration, as suppliers adapt to the growing demands and bargaining power of larger, more unified system integrators.

Pradeep: The deal promises to re-energize the European space industry by creating a streamlined, innovation-driven and globally competitive player. If executed well, it could mean more cutting-edge projects, a healthier industrial base, and a stronger position for Europe in the worldwide space arena, delivering value to customers, shareholders, and employees alike. Programs like IRIS² are likely to benefit from having a robust industrial anchor, which this JV can now provide. European officials see it as a chance to future-proof the industry and ensure its prosperity in the face of fierce competition.

VIA SATELLITE: The three companies will be creating a huge player here. Given how we have seen the importance of small and agile development, particularly for deploying new space technologies in Ukraine, do you think the new company will be able to innovate at speed?

Boggett: Maintaining agility is crucial. While the joint venture will be a large player, it can still innovate at speed by partnering closely with smaller, fast-moving companies and leveraging external innovation. If structured correctly, scale and speed don’t have to be mutually exclusive.

Filotico: The war in Ukraine has underscored how vital speed and adaptability are in modern space operations. Rapid deployment of real-time imagery, and resilient communications networks have shown that agility can be as decisive as scale. Innovation at speed will be the key challenge for this new European space entity. Large industrial groups are not always known for this. However, Airbus, Thales, and Leonardo have already begun to change that. Airbus has created SpaceLab and Airbus Ventures to accelerate disruptive technologies and foster startup partnerships. Thales has pioneered reconfigurable satellites through its Space Inspire platform and digital-engineering hubs, while Leonardo’s SpaceLab initiative and investments in robotics and autonomy are bringing rapid-prototyping and dual-use innovation into orbit.

Pradeep: The new company will have unparalleled resources to innovate, but it must guard against bureaucracy to maintain speed. The question of whether it can truly ‘move fast’ is still open. We can expect the early years to be telling: how quickly does it bring new products to market? How does it react to challenges like Starlink’s rapid iteration? Europe’s space giant will need to prove that bigness won’t equate to slowness, by actively cultivating agility within its ranks. Its ability to engage with Europe’s emerging space startups — rather than crowd them out — will also be a litmus test for agility. If it fails to do so, the merger could indeed create a lumbering titan ill-suited to the fast-changing space landscape — an outcome Europe dearly wants to avoid.

VIA SATELLITE: Given how European nations are focusing on defense spending, do you see that as a major catalyst for this deal?

Boggett: Defense spending is certainly a key driver, but it’s not the only reason. The joint venture strengthens European strategic capabilities broadly, ensuring governments can procure the best technology at the earliest opportunity, as our white paper emphasizes. It’s about addressing capability gaps while fostering a resilient space ecosystem.

Filotico: Defense is clearly a driving force. Space has become a critical defense and security domain, and European governments want industrial partners capable of delivering integrated, sovereign systems. This merger positions the new company as a key partner in Europe’s defense strategy aiming at strategic autonomy and superiority — aligning industrial consolidation with growing defense budgets and geopolitical realities.

Pradeep: Europe’s pivot to higher defense spending and a realization of space’s role in security have been significant catalysts for this deal. The merger positions the new company to be the main industrial beneficiary of upcoming defense-space programs. While the idea of consolidation was driven by commercial competitiveness too, the defense angle likely provided urgency and political backing. The war in Ukraine served as a wake-up call that Europe needs robust, home-grown space capabilities for its security. Having a single champion firm to deliver them is seen as a logical step. Programs like the EU’s European Defence Fund (EDF) and IRIS² will likely use this JV as a lead partner. So yes, the current defense focus is a major reason this merger is happening now and with such momentum.

VIA SATELLITE: What do you see as the main challenges to making this consolidation a success?

Boggett: The main challenges will be integration, maintaining focus on innovation, and ensuring that collaboration with smaller players continues. Success will depend on balancing the benefits of scale with the flexibility needed to support new technologies and emerging companies.

Filotico: The challenges are substantial: optimizing costs/ synergies, aligning national interests, integrating cultures, retaining talent, and maintaining program delivery during transformation. Regulatory scrutiny will also be significant. Success will depend on leadership’s ability to manage complexity while keeping the company focused on speed, innovation, and customer outcomes.

Pradeep: Making this consolidation successful will require masterful management of both internal and external challenges. Internally: integrate efficiently, form a single vision, and execute on improvements. Externally: satisfy regulators, prove the value to customers, and still foster an environment where innovation thrives (even outside the company). None of these are easy, and failure on any one front could undermine the merger’s benefits. Supplier integration and export control alignment across France, Italy, and Germany will be complex. The coming two to three years of planning and initial operation (toward the 2027 launch of the company) will be crucial. As one observer noted, ‘merely combining assets’ isn’t enough – it must be accompanied by a strong strategy and flawless implementation.

VIA SATELLITE: Are we entering a ‘globalization’ period in the space industry, where we will see a small number of global players dominate the market, and will this be Europe’s one?

Boggett: We are seeing a trend toward a small number of large global players, but Europe’s opportunity is to create a different model: a large, capable prime that also supports a thriving network of startups. This layered approach could allow Europe to compete globally without relying solely on a single monolithic company.

Filotico: In many ways, we’ve already seen similar dynamics in the aerospace and defense industry, for example, the Boeing-Airbus duopoly in commercial aviation, where Airbus has recently emerged as the stronger player. Until now, Europe lacked a space industry player comparable in scale to the likes of SpaceX or Lockheed Martin in the U.S., or CASC in China. This merger is creating a European integrated champion. This is a natural and necessary evolution of the industry. But Europe’s version must balance scale with openness, ensuring SMEs and new entrants remain part of the ecosystem.

Pradeep: Europe’s new merger aims to build a single industrial champion – akin to Airbus in aviation – to unify a fragmented sector and compete globally. It makes sense strategically, especially with constrained budgets and geopolitical urgency. But it doesn’t mirror the U.S. model, which derives strength from modularity and overlapping actors. A single European champion may boost scale and coherence, but it must avoid stifling the ecosystem around it. Without fostering smaller firms, agile suppliers, and competitive incentives, Europe could end up with a centralized but less dynamic system.

VIA SATELLITE: Finally, what impact will this deal have across European space supply chains?

Boggett: The joint venture has the potential to strengthen European supply chains by providing larger, more stable contracts and integrating smaller, innovative suppliers into major programs. If managed well, this could accelerate investment, technology transfer, and capacity building across the continent.

Filotico: The impact will be significant. A consolidated prime can bring more stability and predictability for suppliers, but it could also concentrate power. Consolidation at the top of the value chain (e.g. large system integrators like Airbus D&S and Thales Alenia Space merging), typically shifts bargaining power away from the fragmented Tier 1 and Tier 2 suppliers. These smaller players may face increased price pressure, tougher contract terms, and the need to compete for fewer supplier slots. As a result, suppliers may feel compelled to consolidate themselves or specialize further to retain competitiveness.

Pradeep: The European space supply chain will be significantly reconfigured. We’ll likely see a leaner, more centrally managed network of subcontractors. It could lead to greater efficiency and consistency in production (good for Europe’s competitiveness), but it also means fiercer competition for supplier contracts and possibly a weeding out of weaker players. Smaller firms that adapt and innovate could still flourish by aligning with the new giant’s needs, while those that were complacent or relied on protected national markets may struggle. Suppliers in different countries might find themselves part of one large supply web orchestrated by the new company, rather than tied to only “their” national prime. Yet there’s a risk that centralization could sideline niche innovators or reduce procurement diversity. The full impact will become clear as the new company starts rationalizing its supplier lists and future programs take shape, but it’s safe to say every part of the value chain will feel the changes.

Ultimately, the JV represents both a warning and a wager: a warning that the current model is unsustainable, and a wager that consolidation can yield both competitiveness and sovereignty. Whether that bet pays off depends on how fast and how boldly Europe moves next.