Airbus Executives Report Progress in Space Business Turnaround

In a recent update during the Paris Air Show, Airbus executives confirmed that the company is making significant strides in revamping its space business unit, despite the possibility of merging with two other prominent European firms. Alain Fauré, head of space systems at Airbus Defence and Space, emphasized the improvements, stating, "In one word, we are stabilizing. Now we are back on track." This statement comes on the heels of substantial financial challenges, including €1.3 billion (approximately $1.5 billion) in charges in 2024 and €600 million in 2023, largely attributed to issues affecting the OneSat line of geostationary communications satellites.

The company’s difficulties stemmed from inadequate assessment of technological risks associated with satellite programs, leading to poor cost and schedule performance. Fauré acknowledged that the OneSat line faced significant development challenges, yet he expressed confidence in delivering the first OneSat satellite by 2026. The turnaround plan focuses on enhancing competitiveness, efficiency, and profitability, with a goal of streamlining operations and improving overall performance.

Mike Schoellhorn, Chief Executive of Airbus Defence and Space, echoed Fauré's sentiments, noting that the new leadership team is effectively steering the company toward profitability. As part of this plan, Airbus has already eliminated more than 2,000 jobs, primarily in back-office roles, without affecting engineering positions. Schoellhorn remarked, "We are well progressed on that. We are ahead of the curve," indicating a proactive approach to restructuring.

This turnaround unfolds amid ongoing negotiations between Airbus, Leonardo, and Thales Alenia Space regarding a potential merger of their respective space divisions. Roberto Cingolani, CEO of Leonardo, stated that a decision on the merger could come as early as July, contingent upon successful due diligence. Both companies have acknowledged that antitrust reviews could extend the timeline for any merger by up to two years, though Schoellhorn remains optimistic about receiving European Union approval.

The executives argue that consolidation within the European space sector is vital for enhancing competitiveness on a global scale. Schoellhorn pointed out that Europe is in a race against larger U.S. firms such as Lockheed Martin and Boeing, stating, "If Europe wants to be a competitor on a global scale, we need to do something." Fauré added that a merger could create a 'European champion' in space, consolidating resources and capabilities to achieve economies of scale.

The implications of this turnaround are profound, not only for Airbus but for the European aerospace industry at large. As the sector grapples with increasing competition from U.S. firms and the growing influence of private companies like SpaceX, the ability to consolidate resources and enhance operational efficiencies may determine the future trajectory of European space endeavors. Looking ahead, the industry will closely monitor the outcomes of the merger discussions, as these developments could reshape the competitive landscape of the European space market.