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Shareholders approve 400 mln euro capital hike

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80% of funds for new site, operational in early 2028

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Further 10% capital increase if US demand spikes

By Giulia Segreti

ROME, Oct 23 (Reuters) - Italy's Avio will direct most

of an upcoming capital hike to the development of a new U.S.

facility, with the remaining funds aimed at boosting its

European production capacity, the CEO of the rocket maker told

Reuters on Thursday.

"We are in industries - the space and defence ones - that

have a substantial imbalance between demand and supply so we

decided to invest in capacity. Business is picking up even

faster in the U.S., where there is high demand for missiles,

essentially," CEO Giulio Ranzo said.

A planned 400 million euro ($466.48 million) capital

hike was approved unanimously on Thursday by the group's

shareholders, including aerospace and defence group Leonardo

, which holds a share of just under 29% but has still

not said whether it will participate in the capital increase pro

quota.

Ranzo said 80% of the proceeds from the capital hike would

be dedicated to a U.S. factory, which will produce solid rocket

motors for missiles. Construction will start in the first

quarter of 2026 and it will be operational by early 2028.

The remaining funds will be used to boost production capacity

in Europe, for both its space activities, where it wants to

speed up the flight schedule for the Vega-C rocket, and

propulsion technologies for missile systems.

The group will also invest in its suppliers, with the

possibility of acquiring some of them. "We need to make sure

that the world of our suppliers does not become a bottleneck to

growth," Ranzo said.

As a result, the group's defence business, which now

represents 20% of its revenues, will rise to 60% by 2035.

A FURTHER 10%

Should demand in the U.S. be higher than expected, the group

is open to investing more than currently planned as shareholders

approved the possibility of an additional capital increase by

another 10% in the next five years.

Avio USA CEO James Syring told Reuters that the group plans

to enter the U.S. market "going after initially about a third of

the unmet demand".

The company is planning to compete for upcoming tenders in

the country, Syring said, adding to two key contracts won in

2024 with the U.S. Army and RTX's defence arm Raytheon.

The new plant will start with small motors but "we have

sized the factory to go up to (solid rocket motors) 50 inches

(127 cm) in diameter and 10 meters (32.8 ft) in length," Syring

said.

"We feel it's important to not just have defence tactical

motor capability, but be able to compete long term for (all

sizes) up to strategic size," he added.

($1 = 0.8575 euros)