Leonardo’s plan for aerostructures joint-venture slowed by ‘geopolitical’ headwinds

Italian aerospace giant continues talks with prospective partner but is also developing ‘standalone’ approach.
Leonardo’s faltering plan to offload its loss–making aerostructures business into a joint venture with an undisclosed partner in the Middle East appears no closer to fruition due to the disruption caused by the Iran war.

The Italian aerospace giant had hoped to sign off on the deal by mid-year, but in July revealed it had pushed back the deadline until the end of 2026.

But speaking to analysts on 5 November as the company presented its third-quarter results – which showed losses narrowing at the aerostructures unit – chief financial officer Giuseppe Aurilio warned that the “geopolitical situation” was continuing to affect its negotiations.

Part of the agreement requires “local activities to be done in that country”, he says.

“So clearly you can understand that both the progress of our discussions and the meetings, but also that specific discussion about the local content, is somehow affected by the geopolitical situation.”

Leonardo has not revealed the identity of its prospective partner but Saudi Arabia’s Public Investment Fund has been strongly linked.

Internal improvements

And with the joint-venture initiative bogged down, perhaps intractably, Leonardo has begun working on a “standalone plan”, says Aurilio, albeit this “is really key in both the scenarios”, he adds.

“Because if we do the partnership or don’t do the partnership, I think we need to start from a solid business plan, and that’s why we are working a lot on making it more sustainable.”

Asked directly if it was now “more likely than not that the JV does not go ahead”, Aurilio demurred, but said that in either case “the strategy does not change”.

“We think that to make aerostructures sustainable, we need to enlarge the customer base,” he says, pointing out that is the “target of that partnership, or of any other partnership”.

“It is not the time to make a go/no-go [decision] because of the geopolitical situation, and we understand that,” he says.

“But this doesn’t mean the strategy is changing.”

Dreamliner rates rises

Despite little visible progress on this front, the performance of the aerostructures business is improving, largely driven by increased demand from Boeing for 787 parts.

Leonardo builds composite centre fuselage barrels for the Dreamliner at its Grottaglie plant in southern Italy, plus horizontal stabilisers in Foggia, and is currently delivering these at a rate of eight shipsets per month based on Boeing’s requirements.

While a target to hit rate 10 has been pushed back by the airframer, Aurilio expects this milestone to be reached by the end of the year or “more likely” in early 2027.

Although the Grottaglie plant was designed around a monthly rate of 14 deliveries, 10-per-month would put Leonardo’s 787 production “on the safe side”, he adds.

Due to the lower than planned output for the 787, EBITA losses at the unit are slightly worse than forecast: at end-September they had reached €88 million ($98.7 million), against a full-year target of €80 million.

Aurilio estimates the figure will increase to €100 million by year-end, what he calls a “small deviation” from the plan.

Notwithstanding that the figure will meet Leonardo’s target, it will still be an improvement of around 25% over the prior year, he notes.

Deliveries to the 787 programme stood at 63 fuselage sections and 55 stabilisers over the three quarters, up on respective figures of 51 and 38 in the same period a year earlier.

New issues emerge

If the 787 has been the cause of the division’s ills in the past, attention is now switching to the aerostructures it produces for Airbus, on the A220 and A320 families, and ATR, its turboprop joint venture with the European airframer.

“The issue with aerostructures is more on ATR and Airbus at the moment… so to accelerate the recovery, we need to work on those activities.”

However, Aurilio did not expand on the nature of those issues.

Fuselage deliveries to ATR stood at 30 by end-September, against 17 in the same period a year earlier, while ATR itself handed 16 aircraft to customers, versus 11 in the first nine months of 2025.

Unit revenues were €735 million at 30 September, against €510 million a year earlier.

Overall, Leonardo saw nine-month revenues rise to €15.3 billion from €13.4 billion, while EBITA increased to €1.3 billion from €945 million, driven by strong performance at its defence electronics, helicopters, and aeronautics units.

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