German space company OHB has publicly voiced significant concerns over a proposed joint venture that would unite the space business units of three of its largest European competitors: Airbus Defence and Space, Leonardo, and Thales Alenia Space. The move, codenamed Project Bromo, is raising questions about the future of competition within Europe's rapidly expanding space sector.
During a recent earnings call, OHB's chief executive, Marco Fuchs, expressed apprehension that the consolidation could sideline smaller players and limit options for government clients, even as European nations prepare to dramatically increase their space-related budgets.
Key Takeaways
- Three major European aerospace firms—Airbus, Leonardo, and Thales Alenia Space—plan to form a joint venture for their space operations.
- German competitor OHB has raised concerns that this consolidation threatens market competition and its own business model.
- The proposed merger comes as European governments are projected to significantly increase spending on military and civil space programs.
- In a separate strategic move, OHB has launched the European Spaceport Company to develop resilient launch infrastructure.
A New Alliance in European Space
On October 23, Airbus, Leonardo, and Thales announced the signing of a memorandum of understanding to explore creating a massive joint venture. The companies argue that combining their space divisions is necessary to achieve the scale required to compete effectively with large American aerospace corporations in a global market.
The finalization of this venture, known as Project Bromo, is a complex process. It is expected to take up to two years to secure all necessary regulatory approvals, including a thorough review by European antitrust authorities. The proposed entity would bring together some of the most significant satellite manufacturing and space systems capabilities on the continent, creating a formidable industrial power.
Understanding the Players
Airbus Defence and Space: A division of the multinational aerospace corporation Airbus, specializing in military aircraft, missiles, space systems, and communications technology.
Leonardo: An Italian global high-technology company, a key player in Aerospace, Defence, and Security.
Thales Alenia Space: A Franco-Italian joint venture between Thales (67%) and Leonardo (33%), specializing in space systems and satellite manufacturing.
While the companies involved frame the merger as a strategic necessity for global competitiveness, others in the industry are viewing the development with caution.
OHB Raises the Alarm on Competition
The most vocal critic of the proposed venture has been OHB, a prominent German space systems and technology company. Chief Executive Marco Fuchs did not mince words during a November 13 earnings call, stating the plan is a direct threat to his company and the competitive balance of the European space market.
"This is concerning. We are concerned about our roles in the space industry, especially on the European level," Fuchs stated. "It’s creating an environment where we feel that our European business model is coming under pressure and is being threatened."
Fuchs questioned the timing and rationale for such a large-scale consolidation, particularly when the market itself is growing. He pointed out that most of the business for these large companies comes from institutional customers, namely European governments and agencies like the European Space Agency (ESA).
The concern is that a single, dominant entity could reduce the competitive options available to these government bodies. "We believe that institutional customers want to continue to have competitive offerings, and this is something that we will obviously actively communicate in the next weeks and months," Fuchs added.
The potential impact on OHB is multifaceted, affecting everything from partnerships to supply chains. Fuchs noted that OHB has historically worked with companies like Thales Alenia Space, and the new venture could disrupt these established relationships. "This impacts our teaming opportunities. This impacts our supply chain opportunities," he explained.
OHB plans to actively engage with governments, regulators, and other industry players to voice its perspective. "We will be vocal. We will defend our interests," Fuchs asserted, signaling a potentially contentious approval process ahead.
A Market Poised for Massive Growth
The corporate maneuvering is happening against a backdrop of unprecedented government investment in space. European nations are signaling their intent to dramatically increase spending on both defense and civilian space initiatives, creating a larger and more lucrative market.
Projected European Space Spending
- Germany: Plans to spend 35 billion euros ($41 billion) on military space systems over the next five years.
- European Union: The European Commission aims to seek 131 billion euros for defense, space, and security in its next seven-year budget starting in 2028, a fivefold increase.
- Overall Trend: OHB executives believe total European government space spending could double in the coming years.
Markus Moeller, OHB’s chief strategy and business development officer, described the market outlook in stark terms. "The general take is that Europe in total in the next years will massively increase spending on space," he said. "You may want to call it a hot market."
This expected surge in funding from national governments, the ESA, and the European Union is what makes the structure of the industrial landscape so critical. With billions of euros at stake, the question of whether contracts will be awarded in a competitive environment or directed toward a newly formed giant is of paramount importance to companies like OHB.
OHB's Strategic Counter-Move: Spaceports
While challenging the merger, OHB is also making its own strategic moves to secure its position in the evolving European space ecosystem. The company recently announced the creation of a new venture, the European Spaceport Company. This initiative aims to promote the development of both land-based and sea-based launch platforms in Europe.
This new company builds on a previous project, the German Offshore Spaceport Alliance, which studied the feasibility of a mobile launch platform in the North Sea. The study, funded by the German government, resulted in a design for a versatile, multi-user launch pad capable of supporting various rocket types.
Key Goals of the European Spaceport Company:
- Explore using its mobile launch pad concept at the established European spaceport in Kourou, French Guiana.
- Continue working on a dedicated European offshore launch pad.
- Leverage the expertise of MT Aerospace, a subsidiary with nearly 30 years of experience in Kourou's ground infrastructure.
Sabine von der Recke, an OHB board member leading the new venture, highlighted the company's expertise. "At OHB, we are experts in launch sites and infrastructure, and we are closely connected to developments in the market," she said in a statement.
By focusing on launch infrastructure, OHB is positioning itself as a key enabler of European space access, independent of the large satellite manufacturers. Fuchs described the initiative as "an attractive opportunity for Europe to have a more resilient spaceport, launch and ground infrastructure capability." This strategic pivot could provide OHB with a crucial role in Europe's future space activities, regardless of how the industrial landscape for satellite construction evolves.