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Airbus, Thales, Leonardo eye new satellite venture

-sources

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'Project Bromo' based on pan-European MBDA missile venture

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Airbus to give space/defence restructuring details this

week

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Airbus plans up to 2,500 job cuts in space and defence

(Adds context and restructuring plans from paragraph 9)

By Tim Hepher and Giulia Segreti

PARIS/ROME, Dec 3 (Reuters) - Europe's Airbus,

Thales and Leonardo are exploring plans to

set up a new joint space company as they look to compete with

Elon Musk's Starlink.

"Project Bromo", named after an Indonesian volcano,

envisages a standalone European satellite champion modelled on

missile maker MBDA, which is owned by Airbus, Leonardo and BAE

Systems, three people familiar with the matter said.

Until now, Europe's leading satellite makers have said only

that they are looking at working together to create greater

scale in a sector marred by heavy losses, as the rapid growth of

Musk's Starlink network dominates low Earth orbit.

Although still at an early stage, talks have progressed far

enough to earn a code-name inside Airbus and a preferred

structure with a new company combining satellite assets, rather

than one partner buying assets from the rest, the people said.

Leonardo CEO Roberto Cingolani told Reuters the talks

involved various technical discussions and confirmed the

intended structure would be based on the MBDA model.

"That's the one; it is hard that it can be anything else,"

he said on the sidelines of an event in Rome.

Airbus and Thales declined to comment.

The merger proposals are separate from job cuts to be

unveiled this week and could take years to implement, one source

said. But together, they represent a multi-speed effort to bring

Europe's struggling space sector into shape to face competition.

Europe's top satellite makers have traditionally focused

on complex spacecraft in geostationary orbit but have been hit

by the arrival of cheap tiny satellites in low Earth orbit.

Cingolani said satellites would become 75% of the space economy.

JOB CUTS

Talks to reshape the industry's long-term structure come as

thousands of Airbus workers await details of space and defence

job cuts to be presented to unions on Wednesday and Thursday.

Airbus said in October it would cut up to 2,500 jobs, or 7%

of its Defence and Space division, by mid-2026.

Thales, which has two existing alliances with Leonardo in

satellites and services, is in talks with unions over plans to

cut 1,300 space-related positions.

The bulk of the Airbus job cuts are expected to fall in

the 2-billion-euro ($2.10 billion) space systems business,

reeling from 1.5 billion euros of recent charges, industry

sources said.

Airbus has most of its space activities in France.

Defence and Space divisional headquarters in Germany are also

seen likely to be scaled back, while Britain faces concerns over

the future of at least one plant. Spain faces pressure in

defence.

The four nations founded Airbus over 50 years ago and the

share of any cost cutting is a politically sensitive topic.

Airbus has said cuts are expected to be achieved through

voluntary schemes.

The emerging bromance between space companies via "Project

Bromo" and its vision of a European satellite champion is

expected to take longer, following years of stalled efforts.

MBDA was founded in 2001 through the merger of Anglo-French

Matra BAe Dynamics, France's Aerospatiale Matra Missiles and

missile activities of Anglo-Italian Alenia Marconi Systems.

It is owned by groups descended from the founders - Airbus,

BAE and Leonardo - with the first two having most control.

Just months after helping to set up the world's

second-largest missile maker, Airbus' then-parent EADS pledged

to "pursue the necessary restructuring" of the space industry.

More than two decades later, Europe's satellite firms have

so far been unable to overcome competition concerns among other

hurdles despite sporadic sets of talks over that period.

"The MBDA model is being discussed, but technicalities of

governance could be different," Cingolani said.

($1 = 0.9502 euros)