Airbus and Thales in talks to merge satellite businesses

Airbus and Thales are reportedly exploring a merger of their satellite operations, according to the Financial Times and Reuters. This potential deal is seen as a pivotal moment for Europe's space industry, as it grapples with intensified competition from global rivals.

Leonardo is also involved in the talks thanks to the Space Alliance's joint ventures with Thales. Founded in 2005, this strategic partnership includes two joint ventures: satellite producer Thales Alenia Space (Thales 67 percent, Leonardo 33 percent) and satellite services provider Telespazio (Leonardo 67 percent, Thales 33 percent).

The combined entity would be similar to MBDA, a successful cross-border European missile consortium, and aim to enhance Europe's strategic independence in space. However, significant hurdles, including regulatory approval and overcoming political tensions, lie ahead.

This potential partnership comes as both companies grapple with financial challenges in their space divisions. Declining demand for large satellites -- such as Thales' Spacebus series and Airbus' Eurostar bus -- and the rise of smaller, cheaper alternatives, like Space X's Starlink, have impacted their bottom lines. A merger could help them address these issues and better compete in the evolving space market.

Although GEO (Geosynchronous Orbit) satellites will continue to have their place, the smaller LEO (Low Earth Orbit) satellites have grown heavily in popularity thanks to SpaceX and other LEO operators.