SOURCE: Andrew Parsonson, Europe in Space Newsletter
So much ink, both literal and digital, has already been spilled on “Project Bromo.” And while there is a part of me who thinks there is little left to add, there are inconsistencies and omissions that I feel are worth clarifying. As a result, this will be a special edition of the market report, with our regularly scheduled programming returning next week.
The Starlink Boogeyman
Project Bromo is necessary to compete with Starlink. This is an annoyingly prevalent line that makes no sense. Starlink builds its own satellites, which it launches aboard SpaceX rockets. The company then offers high-speed internet connectivity to both consumers and businesses. Starlink also doesn’t manufacture satellites for other companies. Neither Airbus Defence and Space, Leonardo, nor Thales is offering a Starlink competitor. They do not compete.
There is an argument to be had that Starlink fueled a shift to low Earth orbit satellite-based telecommunications away from the larger Geostationary (GEO) satellites, the manufacture of which Airbus Defence and Space and Thales Alenia Space, the joint venture between Thales and Leonardo, have traditionally excelled. And as interest in satellites has waned, both companies have lost share of the telecommunications market. However, with European low Earth orbit communications constellations like OneWeb and IRIS2, both companies have built in avenues to grow and compete in the manufacture of vast numbers of smaller satellites destined for low Earth orbit.
Thales Alenia Space has already responded to this opportunity, opening a new €100 million factory in Rome that has a “strong focus on micro and small satellites.” According to the company, it will be capable of manufacturing more than 100 satellites per year, with the ability to scale production further should market demand require it.
The use of Starlink as the specter driving this merger is something that trade unions are also watching closely. In July 2025, following the initial reports about the merger, CFDT Airbus Defence & Space, the company-level branch of the Confédération Française Démocratique du Travail (CFDT), one of France’s most influential trade union confederations, published a leaflet outlining the merger’s potential impact. In it, the union explained that the argument that competition from Starlink is a primary reason for the merger “does not hold up under scrutiny.”
“Starlink has indeed taken part of the telecommunications satellite market, but that does not affect the Earth observation, navigation, or science markets. Moreover, Starlink is not the cause of huge losses on programs like EGNOS V3 or OneSat. Those stem from organizational failures and serious cost and risk underestimations. Paradoxically, Space Systems currently has 15 telecommunications satellites on order (9 OneSats and 6 Eurostar Neos), a historically high level. A slowdown may come, but the market will not disappear. In fact, the development of constellations (eg OneWeb, IRIS2 ) presents new business opportunities.”
Unpursingly, the 23 October joint statement announcing the signing of the memorandum of understanding that is intended to pave the way for the merger, Starlink is not mentioned once. The closest it does come is stating that the company will “increase competitiveness” in facing global players.
If the Starlink narrative doesn’t hold up, what is the real driver? I think one can be confident that the reason is not an altruistic one based on European sovereignty. The answer seems to lie in more basic corporate drivers like consolidating power, increasing profits, and reducing risk.
A Strategic Retreat
Airbus reported that its Defence and Space division had recorded a €600 million charge in 2023 related to certain Space programmes and announced plans to cut up to 2,500 positions, an activity it referred to as Project Proton. In 2024, the company recorded a €1.3 billion charge on space programmes. Put simply, Airbus continuing to operate in the space business comes with inherent and potentially financially crippling risk, one that its participation in Project Bromo indicates it’s no longer willing to shoulder.
According to the 23 October joint announcement, Airbus will contribute its Space Systems and Space Digital businesses to the new company, Thales and Leonardo will contribute their Telespazio and Thales Alenia Space joint ventures, and Thales will also contribute its Thales SESO optics business. This would have represented approximately €6.5 billion in revenue in 2025. Ownership of the new company will be shared among the parent companies, with Airbus holding a 35% stake and Leonardo and Thales each holding 32.5% stakes. Does that represent the contributions of the three companies, though? No, it doesn’t.
According to financial reports from the three companies, based on 2024 figures, Airbus is contributing approximately 53% of the expected revenues, while Thales and Leonardo account for roughly 27% and 20% respectively. As a result, Airbus’ stake would be significantly lower than warranted by its contribution. So, in the absence of asset transfers or financial compensation, the only conclusion one can make is that Airbus is effectively marking a partial disengagement from the space sector.
These financial pressures and workforce reductions, however, are not unique to Airbus. Thales Alenia Space, the key joint venture between Thales and Leonardo, has also faced significant headwinds, with its parent companies noting persistent difficulties and low margins in the space manufacturing sector, resulting in employee-cutting measures. In its breakdown, CFDT Airbus Defence & Space identified “bidding wars” between Airbus Defence and Space and Thales Alenia Space as leading directly to excessive risk-taking and organizational failures that plagued programs like OneSat.
This strategic retreat by three companies gets to what I think is the core driver behind the merger. Project Bromo is a shared lifeboat, allowing Airbus, Thales, and Leonardo to pool their high-risk space business and spread the financial exposure that has become too heavy for any one of them to bear alone while still providing the value that shareholders demand. At the same time, the new company will have removed all major competition, allowing the three companies to enhance their overall influence on the European space sector.
The Rise of the Rest
Hours after the official announcement of the proposed merger, ESA Director General Josef Aschbacher was asked during a press conference following the agency’s 337th Council meeting about the impact the merger would have on the agency. While he said he wasn’t concerned about its potential impact on competition, he noted that the merger would “change the landscape” and that ESA is assessing its implications for the agency. The findings, expected early next year, will guide future industrial policy and procurement decisions, he added.
Aschbacher’s diplomatic response is precisely what one would expect from the head of an agency that must balance the industrial interests of all its member states. However, behind that diplomacy lies a new reality: the creation of a single, dominant supplier for many of Europe’s most critical space programs carries inherent risk for the customer.
Aschbacher and agency heads from across Europe will undoubtedly be wary of the immense pricing power and potential lack of agility from this new behemoth. And while the political power of this new company will likely seek to stifle any call for competition, the need for an alternative and the company’s likely several-year-long integration process could also offer significant opportunities for competitors.
The most immediate beneficiary of this new landscape is likely to be Germany’s OHB. Long the bridesmaid and not the bride in Europe’s space-hardware scene, OHB has an opportunity to now position itself as the clear, credible, and more agile alternative. I would expect ESA, national space agencies, and governments to adopt procurement strategies that award contracts to companies like OHB not only on technical merit, but also to actively preserve supplier diversity and sustain a competitive industrial base.
This move at the top could also energize a new wave of NewSpace entrants. Startups, seeing a market now dominated by a slow-moving giant, may find it easier to identify and aggressively target lucrative niches that the new entity is too unwieldy to serve effectively. In its quest to consolidate the market, Project Bromo may have ironically created the perfect conditions for its future competition to flourish.
Conclusion
In a joint statement from the CEOs of Airbus, Leonardo, and Thales, the three explain that the merger will help ensure Europe’s autonomy in the strategic space domain. This is the grand, official narrative. Yet, as this analysis shows, the project’s foundations seem less about sovereign steel and more about shareholder dividends.
That is undoubtedly the most cynical read, but to bastardize Samuel Johnson, it seems “sovereignty” is being wielded as the last refuge of the corporate scoundrel. The Starlink boogeyman was a convenient fiction. The tri-party strategic retreat appears to be a financial reality. The irony is that, in their quest to wall off the garden, the aerospace giants may have just guaranteed that long-overshadowed competitors will finally have their season in the sun. This will, however, offer little consolation to the workers who are likely to lose their jobs while the trio of CEOs state that Project Bromo will offer them an “opportunity to be at the heart of this ambitious initiative, while benefiting from enhanced career prospects and the collective strength of the three industry leaders.”
