Leonardo Finds New Partner for Aerostructures Unit After Boeing Issues

Leonardo, the Italian aerospace and defense giant, has announced that it has identified an investment partner in the defense and space sector to co-invest in a new industrial initiative for its aerostructures division. This move comes after the company's aerostructures business has struggled to achieve profitability due to Boeing's production issues and delays, which have significantly impacted Leonardo's financial performance.



Leonardo's aerostructures division, which produces key components for the Boeing 787 Dreamliner, the Airbus A220 and A321, and regional turboprops produced by ATR, has been facing challenges due to Boeing's production cuts and delays. The division's financial position has been burdened by unused capacity, with a loss of €129 million in the first nine months of 2024. The division's EBITA losses are consistent with the previous year, but the company's revenue has increased slightly. Leonardo's CEO, Roberto Cingolani, has acknowledged the division's financial challenges and the need for a solution.

Leonardo's aerostructures division supplies Boeing with two center fuselage sections and the horizontal stabilizer for the 787 Dreamliner. However, Boeing's production cuts and delays have led to a significant reduction in demand for these components, impacting the division's financial performance. In 2024, Leonardo's aerostructures division was expected to lose €50 million in two years if shipments remained at the current low level.



Leonardo has been attempting to return its aerostructures business to profit for several years and had been hoping to reach break-even by 2025. However, the company's financial challenges are exacerbated by inflationary pressure on material and labor costs. In response to these challenges, Leonardo has been exploring various scenarios to address the situation, including introducing new programs, enhancing industrial efficiency, and considering a carve-out of the division.

Leonardo's new partnership with an investment partner in the defense and space sector is expected to bring additional financial resources, enabling the company to invest in research and development, modernize its facilities, and improve its production capabilities. This investment will help Leonardo maintain its competitive edge in the aerostructures market and better serve its customers, including Boeing.

The collaboration may also open up new opportunities for Leonardo in the defense and space sector, allowing the company to expand its product offerings and tap into new markets. This diversification can help Leonardo reduce its dependence on the commercial aerospace market and mitigate risks associated with fluctuations in demand.

In conclusion, Leonardo's new partnership with an investment partner in the defense and space sector aligns with the company's long-term strategic goals of enhancing its aerostructures business and ensuring its financial sustainability. The collaboration is expected to bring additional financial resources, new opportunities, and improved market position to Leonardo, helping the company overcome the challenges it faces in the aerostructures market.