European defense companies should step up collaboration to fix ‘fragmented’ sector, Leonardo CEO tells CNBC
European defense companies must take a stronger lead on collaborating to help the continent become independent of the U.S. security umbrella, Leonardo‘s CEO told CNBC.
Speaking with CNBC’s “Squawk Box Europe” on Wednesday after Leonardo’s annual results statement, Roberto Cingolani said European defense companies have “all the capabilities and technical skills” and should not wait for governments to fix the sector, which he warned was “fragmented.”
Companies should take the lead in a process of “aggregation”, which European governments would follow, he said, adding that this approach “pays a lot” and helps enable companies to become “better, faster, more profitable.”
He pointed to Leonardo’s partnership with the U.K.’s BAE Systems and Japan’s Mitsubishi Heavy Industries as co-founders of the Global Combat Air Programme (GCAP) to jointly develop the Tempest stealth fighter.
Leonardo.
Leonardo has also developed joint agreements with German defense giant Rheinmetall for land defense systems, and with Turkish drone maker Baykar, he said.
Last October, Leonardo also unveiled plans for a combined space and satellite company with Airbus and Thales to rival Elon Musk’s Starlink.
“I’m firmly convinced nobody can make it on their own,” Cingolani told CNBC. “We need to deploy synergies, we need to understand joining forces in a competitive industry like defense is fundamental to be successful, to be fast in responding to the needs of our societies.”
‘Silent agreement’
U.S. President Donald Trump’s bid to annex Greenland contributed to fractures in the NATO alliance, as the war in Ukraine focuses attention on Europe’s defense.
The continent’s growing push for greater military sovereignty now underpins what investors have called a multi-year “mega-trend” fueled by evolving geopolitical threats and doubts over U.S. commitments to NATO.
“The silent agreement was that Americans were paying for European defense. Europeans were rather relaxed after 80 years of peace. We were purchasing primarily American technologies. Correctly, the Americans want Europeans to be more independent. It’s a reasonable request,” he said.
“On the other hand, it means we need to develop our own technologies that are complementary to the American ones and under the NATO umbrella, he added.
“It’s not America versus Europe — it’s just collaborating on a more symmetric basis.”
His comments came after Leonardo reported an 18% annual increase in core profits — topping 1.75 billion euros ($2.1 billion) — in its latest earnings statement on Wednesday.
New orders rose 14.5% last year, to 23.8 billion euros, powered by its aeronautics division, as net debt sat at 1 billion euros — a 44% decrease for the Rome-headquartered, Milan-listed company.
Its shares finished Wednesday’s session 3.5% down after the earnings.
