The BROMO Merger: Consolidation as Strategy or Survival?

Europe's space giants merge. But who benefits?

Airbus, Leonardo and Thales have signed a Memorandum of Understanding aimed at combining their respective space activities into a new company. The new entity will focus on both manufacturing and services, spanning a portfolio of “complementary technologies and end-to-end solutions, from space infrastructure to services (excluding space launchers).” The newly formed mega-company also intends to serve as the partner for national sovereign space programmes.

The possible merger of three among the largest European space corporations has been discussed for years, but it gained momentum in 2024 after both Airbus and Thales Alenia Space reported heavy losses in their satellite business. The project, called “BROMO” after an Indonesian volcano, has been modelled on the missile maker MBDA, which is owned by Airbus, Leonardo and BAE Systems.

The new company will encompass Airbus’s Space Systems and Space Digital businesses from Airbus Defence and Space, Leonardo’s Space Division including its shares in Telespazio and Thales Alenia Space, and Thales’s shares in Thales Alenia Space, Telespazio, and Thales SESO. Ownership will be shared with Airbus holding 35%, while Leonardo and Thales each take 32.5% stakes. The company is expected to become operational in 2027.

Does Europe Need a Giant Single Company?

Guillaume Faury, Roberto Cingolani and Patrice Caine declared in a joint statement that “This proposed new company marks a pivotal milestone for Europe’s space industry” and it aligns with “the ambitions of European governments to strengthen their industrial and technological assets, ensuring Europe’s autonomy across the strategic space domain.” The language reflects familiar themes—strategic autonomy, competitive presence, stronger Europe. Yet questions remain about whether consolidation addresses Europe’s underlying challenges.

“The industry has long anticipated the Airbus–Thales–Leonardo merger with both interest and concern,” said Dr. Agnieszka Łukaszczyk, Founder & CEO of hiALtitude Consulting in Brussels. “In another geopolitical context, this would raise serious competition questions. Today, it reflects Europe’s push for strategic autonomy — but consolidation alone doesn’t guarantee innovation or efficiency. Merging large companies with existing efficiency and financial challenges won’t automatically create a stronger, more innovative entity.”

Where Is the Market?

The financial context is significant. In 2024, Airbus registered a €900M loss on its 2023 space revenues and announced plans to cut up to 2,500 positions. Thales Alenia Space shed 15% of its workforce in 2024 after a zero-profit year. These companies are consolidating from a position of financial pressure, which raises questions about the merger’s ability to deliver on its ambitious promises. If they were struggling to attract customers individually, how does combining them change the fundamental market dynamics?

Furthermore, the merger has often been described as an attempt to compete against SpaceX, but there are no current hints that the BROMO project will target international markets. It appears oriented primarily toward the European domestic sector, but how will it gain something out of this?

After the reassessment of the GEO market in favor of the LEO market, institutional customers have become the main source of income for European space players. Will ESA, national space agencies, or European defense ministries receive better products, faster delivery, or more competitive pricing from this consolidated entity?

There are also questions about the work force. The MoU states the new company will employ 25,000 people and “create new opportunities for employee development.” However, Airbus Defence and Space alone currently employs 40,000 people. Will workforce adjustments may be part of the consolidation process?

Potential winners

The political dynamics add another layer of complexity. Leonardo, supported by Giorgia Meloni’s government and addressing previous concerns about its shares in Thales Alenia Space and Telespazio, may play a significant role in shaping this merger. However, where and how the new company will be effectively controlled (particularly between Italy and France) will likely influence strategic decision-making going forward.

Meanwhile, Germany’s OHB remains outside the agreement, potentially positioning itself as an alternative European provider. As Łukaszczyk notes, “The silver lining is that a merger of this scale could open doors for smaller, more agile companies. Europe can’t afford a monopoly—and diversity in ideas and players will be our true competitive advantage.”

The BROMO merger represents a significant restructuring of Europe’s space industrial base. Whether it proves to be a path toward renewed competitiveness or primarily a response to financial pressures remains to be seen. The merger alone doesn’t resolve the fundamental questions: where will the growth come from, and what will make European space capabilities more attractive to customers in a competitive global market in which the European providers are effectively at loss?