Leonardo is in advanced discussions with a partner to set up an aerostructures joint venture that its chief executive vows will become a “global champion” in the sector.
Although Roberto Cingolani says he is bound by a confidentiality agreement from identifying the likely investor, Bloomberg has named Saudi Arabia’s wealth fund, quoting sources close to the matter.
In January, the Italian group signed a memorandum of understanding with Saudi Arabian state entities to discuss expanding collaboration in the aerospace and defence sector without singling out the loss-making aerostructures unit.
As part of a wide-ranging update on a five-year growth and transformation plan he launched last year, Cingolani also revealed that the three partner nations in the Global Combat Air Programme (GCAP) expect 350 aircraft orders by 2035. It is thought to be the first time a sales target has been announced for the next-generation fighter programme, in which Leonardo is teamed with the UK’s BAE Systems and a Mitsubishi Heavy Industries-led consortium from Japan.
Speaking to media and investors on 11 March, Cingolani said the reasons behind the underperformance of Leonardo’s aerostructures business – which makes Boeing 787 composite fuselage sections and horizontal stablilisers in Grottaglie in southern Italy and is responsible for Leonardo’s 50% share in ATR – had “never been addressed strongly in the past years”.
Noting that a preferred partner was selected after six months of due diligence and screening other candidates, he says the joint venture will create efficiencies and scale to allow “diversification into new products and supply chain restructuring”. He says he will provide a “very clear picture for the future” by the end of the year.
Cingolani also identifies Leonardo’s planned joint venture with Turkish uncrewed air systems (UAS) specialist Baykar, announced on 6 March, as another example of the company’s willingness to work with partners to expand into growth areas of the industry. Although Leonardo has been developing its own UAS programmes since the early 2000s – including the medium-altitude medium-endurance Falco family – these have failed to achieve traction beyond Italy.
Cingolani says the combination of Baykar’s “extensive portfolio of advanced platforms” and manufacturing capabilities with Leonardo’s expertise in payloads, mission systems and European certification, will allow “us to start almost immediately”. He adds: “We were not effective in the [UAS] market so far, so it is a win-win for both companies.”
He also estimates increased defence spending in Europe as a response to the threat from Russia and the Trump administration’s ambivalence towards NATO could increase Leonardo’s revenues by up to €6 billion ($6.55 billion) a year, based on a one percentage point of GDP increase in budgets by Italy and other European countries.
Under the five-year strategy – which also includes the setting up of a new space division to consolidate all Leonardo’s activities in the sector, as well as a business dedicated to developing artificial intelligence and other digital technologies – Leonardo is targeting revenue growth from €17.8 billion in 2024 to €24 billion in 2029.
