MILAN (Reuters) -European aerospace groups Leonardo, Thales and Airbus could sign an initial agreement to combine their satellite businesses as early as this year, the head of Airbus' defence and space division said in an interview on Sunday, confirming an earlier Reuters report.

Under "Project Bromo," Leonardo, Thales and Airbus plan to set up a satellite manufacturing company to compete with rivals from China and the U.S., including Elon Musk's Starlink.

"We're on the right track, but several issues still need to be clarified before taking such a major step," Airbus Defence and Space CEO Michael Schoellhorn told Italian daily Il Corriere della Sera.

Schoellhorn added that operations of this kind require a two-step process, comprising of a framework agreement and then a phase leading to the actual closing of the deal. "In this case, I believe the signing (of a first deal) could take place as early as in 2025", he said.

($1 = 0.8523 euros)