Space: Italy – France 1-0

While across the Alps there are cries of scandal over insufficient investment in the sector, Italy is soaring. However, a point of balance and a longer-term vision are needed.

BY EMILIO COZZI

It’s always a derby when it comes to Italy and France. Across the border, frustration grows over a possible “overtake”—assuming that metaphor even makes sense in a European perspective—leading to unrest and alarm. This happens in any context or situation, from the economy to football, and now even one of the areas that has historically filled the French with pride: space. Therefore, it caused a stir on July 18 when an article appeared in La Tribune, one of France’s leading economic newspapers, signed by Jean-Luc Moudenc and David Lisnard, mayors of Toulouse and Cannes. These two cities are crucial for France’s space industry, hosting important plants of giants like Airbus and Thales Alenia Space, factories, and laboratories where large satellites are built, the backbone of the nation’s space achievements.

The title of the article was “Satellite Space Industry: No to the Downgrading of France,” and the message from the two mayors was clear and concerned: “France, which until recently had the leading space industry in Europe and accounts for nearly 40% of the sector’s 57,000 jobs, is being caught up and soon left behind due to its disinvestment—both literally and figuratively—in satellites.”

“The 2024-2030 military planning law scrapped the Syracuse 4C satellite,” the mayors said, continuing: “It drastically staggered payment flows and did not foresee a new satellite order. Current funding choices, which favor European missions over innovative national projects, risk diluting our skills and influence.”

From Iris 2 to Iride

The alarm is driven by less-than-impressive figures from the satellite business, particularly concerning Airbus and Thales—details that were also reported in La Tribune. At the same time, these numbers emerged within a broader context involving evolving business strategies that also include Italy and the Space Alliance, the partnership between Thales and Leonardo. It all started with another exclusive from La Tribune, a scoop revealing Thales and Airbus’ intention to exit the “SpaceRise” consortium, a group of companies responsible for building and operating the European Union’s first satellite internet constellation, Iris 2 (which includes Airbus Defence and Space, Eutelsat, Hispasat, SES, and Thales Alenia Space).

According to the French newspaper, the business opportunity no longer convinced the two giants. The construction of Iris 2 requires deploying a network of dozens of satellites in low and medium orbit, but the business risk is deemed excessive. This is because only part of the constellation would be covered by public funding (the segment serving institutional purposes); the rest would have to be financed by the companies, which would then be granted the possibility to commercialize the service.

Iris 2 is expected to become operational in 2027, but the timeline is already uncertain, as is the performance of a configuration never before attempted (integrating satellites in both medium and low orbit). For this reason, according to La Tribune’s scoop, Thales and Airbus would prefer to withdraw, limiting themselves to their more familiar role as suppliers for the constellation.

A Two-Faced Janus

The difficulties in the satellite sector for Airbus and Thales, with six and seven-figure losses and space segment balance sheets trending towards red, are not new. Nor is it surprising that the situation is quite the opposite on the Italian side, making the Space Alliance seem like a two-faced Janus.

It’s important to remember that the alliance between Thales and Leonardo is embodied in Thales Alenia Space (67% French and 33% Italian) and in Telespazio (with reversed percentages). The problems, unsurprisingly, mainly concern the former, whose French side is struggling in terms of revenue and profits, while the Italian side is booming, driven by private contracts (modules for the Axiom space station, Cygnus capsules for Boeing) and institutional orders (modules for the Lunar Gateway and smallsats for Iride, Italy’s cutting-edge Earth Observation program).

It’s easy to imagine the French frustration. However, regarding Italy’s “overtake,” it would be wise to wait for clear numbers before celebrating. It’s not impossible that Leonardo might soon call out the imbalance to reconsider the alliance’s structure. Though difficult, it wouldn’t be an unplayable game. This possibility was hinted at last June during the presentation of Leonardo’s industrial plan to Parliament by CEO Roberto Cingolani and the then-managing director of the company’s space division, Franco Ongaro: “Some time ago—Ongaro said—we were the partner losing money; today, it’s the other side.” He added: “We’re working to find a solution. It’s a time when geotelecommunications aren’t doing well worldwide.” Notably, Ongaro was recently succeeded by Massimo Claudio Comparini, the man who, under his leadership, helped Thales Alenia Space Italia consolidate its market position in recent years.

There has also been talk of uniting efforts into a single space unit involving Thales, Airbus, and Leonardo. This option, in terms of “critical mass,” would see Italy in the minority, but the calculations are yet to be made.

Public Investments and Startups

Back in France, the mayors of Toulouse and Cannes blame the government’s strategy, which they say bet on the creation and incubation of startups in the space sector—the NewSpace program—at the expense of public investments in scientific or strategic areas like Defense. In other words, France stopped acting like France just as Italy committed more than seven billion euros to the space sector from now until 2027. These resources include funds for the European Space Agency, investments from the National Recovery and Resilience Plan (PNRR), and national budget allocations. All of this translates into jobs, business, and a multiplier effect on value creation. It’s easy to see why this would matter to local administrators.

Returning to the sports metaphor, it’s impossible to ignore another aspect of the “space derby,” the launchers: 2024 marked the end of the agreement with the French Arianespace for the commercial management of the Vega-C medium-light launcher, which is almost entirely Italian-built. After the VV29 flight, scheduled for the fourth quarter of 2025, Avio will operate and sell launch services. This decision was made as ArianeGroup announced a new reusable rocket proposed by the startup Maiaspace, a fully French product considered by many to be in direct competition with Avio, the historic partner of the French group. Either way, we shouldn’t underestimate the fact that the Vega-Ariane duopoly could soon face competition from new light launchers from Germany, Spain, and France.

In short, many variables are at play. While it may be tempting to predict who will come out on top tomorrow, doing so might distract from the real competition: that against “extra-continental” countries and companies, primarily the United States, which boasts an ecosystem that’s hard to follow and perhaps senseless to replicate. Because if, as Moudenc and Lisnard said, “On a global scale, 72% of space-related sales are generated by institutional markets (defense, meteorology, and science), but France is inexplicably the exception, with only 49% of its sales coming from these essential contracts for the country’s independence,” then a reflection is needed: in the long run, will France’s market benefit from its competitiveness since public investments weigh less? And is Italy, by injecting massive capital into the ecosystem, inflating a bubble, or will it gain a stable leadership after this overtaking? Beyond the derby, the real match is on the world stage.