Italy’s Leonardo, one of Europe’s biggest defence companies, and Turkish drone giant Baykar have formed a joint venture to develop drones as European Union countries ramp up military spending to defend themselves against Russia and other threats if U.S. forces withdraw from the continent.
In a news conference in Rome Thursday, Leonardo CEO Roberto Cingolani said the European drone market will be worth an estimated US$100-billion over the next decade and will see the launch of sensor- and weapons-laden machines that will essentially evolve into unmanned fighter jets. “Europe is reacting,” he said. “They have decided that peace has a price.”
The Leonardo-Baykar joint venture was announced a day after Germany tore up its fiscal “debt brake” to allow a surge in defence spending and the same day that EU leaders met in Brussels to discuss ways to boost their militaries and support Ukraine, all because the White House suspended weapon deliveries and U.S. intelligence sharing with Ukraine this week, delivering a blow to Kyiv’s ability to fight a war that has entered its fourth year.
Before heading into the EU leaders’ meeting, Danish Prime Minister Mette Frederiksen said that Europe must “spend, spend, spend on defence and deterrence.” In a speech Wednesday evening, French President Emmanuel Macron said, “I want to believe that the U.S. will stand by our side, but we have to be ready for that not to be the case. The future of Europe must not be decided in Washington or Moscow.”
Ukrainian President Volodymyr Zelensky thanked the EU leaders for the meeting. “It is very important that Ukrainians are not alone. We feel it and know it,” he said on social media, apparently referring to Donald Trump’s withdrawal of support for Ukraine’s war effort and his disastrous meeting in the White House a week ago with the U.S. President.
Leonardo, which is 30 per cent owned by the Italian state, makes military and civil helicopters, aircraft, defence electronics, aerostructures for Boeing and Airbus passenger jets, satellites and drones. In 2023 it had sales of €15.3-billion ($23.5-billion) and an order backlog of almost €40-billion ($61.6-billion). Its shares have soared in recent weeks as EU countries signalled their intent to boost military spending; they are up 123 per cent in the past year, giving the company a market value of more than €26-billion ($40-billion).
Baykar is co-owned by chairman Selcuk Bayraktar, who is the son-in-law of Turkish President Recep Tayyip Erdogan. The company is a leader in artificial-intelligence-enabled drones and is the world’s biggest exporter of large military drones. One of its models, a high-altitude, heavy-lift, twin-engine machine called the Akinci, can carry 1,350 kilograms of bombs, rockets or missiles and stay in the air for 24 hours. One version comes with Pratt & Whitney Canada turboprop engines.
The joint venture’s first product, expected in about 18 months, will be based on the Akinci and will contain the latest electronics, such as radar and other sensors, made by Leonardo. Mr. Bayraktar said the Italian-Turkish deal presents an “opportunity to build aerial supremacy,” given that drones are now expected to fill key roles in aerial combat missions.
Mr. Cingolani said the future of the European defence market lies in forging alliances and joint ventures with competitors to ensure production capacity, tap the export market and reduce market fragmentation. The U.S. defence industry is much more concentrated, with companies such as Boeing, Lockheed Martin and General Dynamics controlling large shares of the market.
Last year, Leonardo formed a joint venture with Germany’s Rheinmetall to make main battle tanks and armoured personnel carriers for the Italian Armed Forces. Leonardo is also part of an alliance with Britain’s BAE Systems and Japan’s JAIEC that is developing a sixth-generation stealth fighter jet under the Global Combat Air Programme.