Leonardo SpA: Strategic Leverage in European and U.S. Defense Markets
Leonardo SpA, a leading aerospace and defense technology provider headquartered in Rome, has positioned itself at the nexus of two pivotal contracts that underscore its role as a key European supplier and a strategic partner in the United States.
1. Participation in the German Eurofighter Order
On 15 October 2025, German Defence Minister announced an order of 20 Eurofighter Typhoon jets for the Bundeswehr, with delivery slated for 2031‑2034. The jets will be assembled at Airbus’s Manching plant near Munich, with the consortium comprising Airbus (France/Spain), BAE Systems (UK), and Leonardo (Italy). This order represents a continuation of Germany’s long‑term commitment to the Eurofighter platform and provides Leonardo with a substantial revenue stream and a sustained production commitment through the first decade of the next decade. Given Leonardo’s deep integration into the Eurofighter supply chain—particularly in avionics, electronics, and air‑frame components—the company is expected to capture a significant share of the contract’s value.
2. Collaboration with Boeing on the U.S. Army Flight School Next Contract
In a complementary move, Leonardo has entered into a joint venture with Boeing to bid for the U.S. Army’s Flight School Next program, a contractor‑owned, contractor‑operated (CO‑CO) service aimed at providing flight training and maintenance for Army aviation. The partnership leverages Leonardo’s expertise in aviation systems and training, while Boeing contributes its extensive U.S. defense procurement experience. Securing this contract would not only diversify Leonardo’s revenue base outside of Europe but also cement its status as a preferred partner for large‑scale defense training initiatives in the United States.
3. Market and Financial Context
Leonardo’s market capitalisation stands at €32.08 bn, with a 52‑week high of €56.68 and a low of €21.37, reflecting a volatile but fundamentally robust sector. The company’s Price‑to‑Earnings ratio of 30.24 suggests that investors are pricing in growth expectations linked to its strategic contracts and long‑term defense procurement cycles. The most recent closing price on 13 October 2025 was €52.38 per share, indicating a modest retracement from the recent high.
The broader European equity market remains buoyant amid expectations of U.S. Federal Reserve rate cuts, which are expected to inject liquidity into equity markets and potentially lift defense‑sector valuations. Meanwhile, the Euro has held firm at 1.1627 USD despite declining bond yields, providing a stable backdrop for Euro‑denominated defense contracts.
4. Forward‑Looking Assessment
Leonardo’s dual engagements—European (Eurofighter) and American (Flight School Next)—position it to capitalize on sustained defense spending in both markets. The company’s diversified product portfolio, spanning helicopters, aerostructures, airborne and space systems, and land and naval electronics, aligns well with the evolving requirements of modern armed forces. With the Eurofighter deliveries commencing in 2031 and the Flight School Next program still in the bidding phase, Leonardo’s revenue stream is set to benefit from a mix of long‑term contracts and short‑ to medium‑term procurement cycles.
In sum, Leonardo’s strategic alliances and robust order pipeline reinforce its standing as a cornerstone of Europe’s defense industrial base while simultaneously expanding its footprint in the U.S. market. The company’s financial health, coupled with its role in high‑value defense projects, suggests a solid trajectory for shareholder value creation over the coming decade.
