Leonardo’s Strategic Aerospace Partnerships Drive Global Growth

Leonardo’s Strategic Leap in Aerostructures

The global aerospace industry is witnessing a pivotal transformation as Leonardo moves to establish itself as a dominant force through strategic partnerships. With Boeing’s 787 production delays creating ripples across supply chains and growing demand for next-generation aircraft components, the Italian defense giant’s push to form an aerostructures joint venture couldn’t be timelier. This initiative aims to stabilize its financially turbulent division while capitalizing on emerging opportunities in military and commercial aviation.

Aerostructures – critical components like fuselages, wings, and stabilizers – represent a $68 billion market projected to grow 4.4% annually through 2032. Leonardo’s Grottaglie plant in southern Italy, responsible for Boeing 787 composite sections and ATR turboprop assemblies, has struggled with losses exceeding €129 million despite generating €571 million in 2024 revenue. The proposed joint venture signals a strategic pivot to regain competitiveness through scale and diversification.

Rebuilding a Foundation Under Pressure

Leonardo’s aerostructures division has been caught in the crossfire of Boeing’s quality control crises and pandemic-era travel slumps. While producing over 1,100 fuselage sections for the 787 program, the unit faced erratic demand as Boeing reduced Dreamliner output from 14 to 5 monthly units during peak challenges. CEO Roberto Cingolani’s blunt assessment – “We cannot wait any longer for Boeing’s recovery” – underscores the urgency behind seeking external partnerships.

The company’s five-year transformation plan targets €24 billion annual revenue by 2029, up from €17.8 billion in 2024. A key component involves separating the aerostructures business into a joint venture, allowing Leonardo to share R&D costs and access new markets. Saudi Arabia’s Public Investment Fund (PIF) emerges as the likely partner, building on January 2025 agreements for broader aerospace collaboration between Rome and Riyadh.

“This joint venture will create efficiencies and scale to allow diversification into new products and supply chain restructuring,” states Cingolani. “We’ll provide a very clear picture for the future by year-end.”

Expanding Through Strategic Alliances

Parallel to aerostructure reforms, Leonardo is forging partnerships in adjacent sectors. The March 2025 collaboration with Turkish drone manufacturer Baykar combines Leonardo’s sensor expertise with Baykar’s combat-proven UAV platforms like the TB2. While Leonardo’s Falco drones found limited export success, this venture aims to penetrate European markets hungry for affordable reconnaissance systems.

Analysts note the Baykar deal follows a pattern of European defense firms seeking technology transfers with rising Middle Eastern and Asian manufacturers. For Leonardo, it provides immediate access to Baykar’s 140,000 sq ft Istanbul production facility and a pathway to certify systems for NATO allies – a process that previously hindered standalone exports.

Defense Priorities Shape Future Growth

Europe’s heightened military spending creates new opportunities, with Leonardo forecasting up to €6 billion annual revenue growth from defense contracts. The Global Combat Air Programme (GCAP) – a UK-Italy-Japan sixth-generation fighter project – expects 350 orders by 2035, representing a potential €45 billion program value at estimated $130 million per unit.

GCAP’s Production Pipeline

As prime contractor for GCAP’s avionics and mission systems, Leonardo is positioning its Pomigliano d’Arco plant to become a neural hub. The facility already produces ATR turboprop components and Boeing 787 sections, but would require substantial upgrades to handle stealth-composite manufacturing for next-gen fighters. Italian defense officials confirm plans to allocate 20% of their €32 billion military modernization budget toward GCAP infrastructure.

Challenges remain in aligning three nations’ production timelines. Japan seeks initial operational capability by 2035, while Britain aims for 2040 deployments. Leonardo’s ability to coordinate with BAE Systems and Mitsubishi Heavy Industries will be critical, particularly in developing common maintenance frameworks across potential export customers like Saudi Arabia and Qatar.

Conclusion: Navigating a Shifting Aerospace Landscape

Leonardo’s dual focus on aerostructures restructuring and defense expansion reflects broader industry trends. Commercial aviation suppliers face pressure to diversify beyond Boeing/Airbus dependencies, while military contractors must adapt to Europe’s collective security awakening post-Ukraine. The Saudi joint venture could become a template for Western manufacturers seeking capital infusion without full technology transfer.

Looking ahead, success hinges on executing the GCAP timeline while stabilizing aerostructures through new contracts. Potential growth areas include the COMAC C929 widebody program and Airbus’ next-gen narrowbody studies. As Cingolani notes, “The combination of industrial partnerships and defense tailwinds positions us to lead in both traditional and emerging aerospace sectors.”

FAQ

Why is Leonardo forming an aerostructures joint venture?
The division has faced persistent losses due to Boeing’s production volatility and needs external investment to modernize facilities and diversify products.

Who is Leonardo partnering with for the joint venture?
While unconfirmed, multiple reports indicate Saudi Arabia’s Public Investment Fund (PIF) as the likely collaborator.

How will this affect the global aerostructures market?
The venture could challenge established players like Spirit AeroSystems by combining Leonardo’s composite expertise with Saudi Arabia’s manufacturing ambitions.

What is the significance of 350 GCAP fighter orders?
This represents the first official sales projection for the sixth-gen fighter, suggesting confidence in export demand beyond the three partner nations.

Sources: FlightGlobal, Coherent Market Insights