The Leonardo (D)assaultIt is not a secret that Europe’s defence landscape has shifted dramatically to a pace unseen since the Cold War. In 2022, Central and Western Europe’s combined military outlays reached $345 billion, surpassing 1989 levels as the Cold War ended1. Where there is a commonly cited “peace dividend”, this is the era reaping the rearmament rewards. Even traditionally pacifist countries are upping their defence outlays, while frontline states like Poland and the Baltic nations are planning well above 2% of GDP (the NATO defence spending target) to bolster their militaries.
Of note, European officials, including the European Central Bank (ECB) (monetary) policymaker Olli Rehn, have explicitly called for joint EU programs to fund air defence and drone production to support Ukraine and strengthen Europe’s own defence, even if it means loosening fiscal rules2. When the monetary policy folks start weighing in on defence spending, it is best not to ignore it.
Dassault Aviation and Leonardo SpA, are integral to Europe’s defence-industrial base and they will be pivotal beneficiaries of the continent’s rearmament. Crucially, unmanned aerial vehicles (UAVs)—from surveillance drones to combat-capable systems—are an area where both firms are actively developing capabilities, aligning with Europe’s defence priorities.
Dassault Aviation, long synonymous with fighter jets, spearheaded Europe’s stealth unmanned combat air vehicle (UCAV) demonstrator nEUROn. Launched in the 2000s as a multinational project, nEUROn was led by Dassault Aviation with contributions from several European partners including Leonardo SpA (then Alenia)3. nEUROn combines many of the critical components of modern warfare systems including autonomous flight controls and low-observable (stealth) design. The project is also demonstrative of pan-European collaboration in UAVs. Not to be outdone, Leonardo SpA has developed its own family of medium drones (such as the Falco UAV series). Not to mention, its collaborations with companies like BAE Systems in the Eurofighter Typhoon and next-gen Tempest/GCAP fighter programs.
In essence, Dassault Aviation and Leonardo SpA are key enablers of Europe’s push for strategic autonomy in defence and are poised to benefit from the pivot to UAVs—a shift that began slowly at the beginning of the 21st Century and accelerated meaningfully with the experience gained from the conflict in Ukraine. European militaries have been paying attention; drones have proven their value for reconnaissance, target acquisition, and even precision strikes, fundamentally changing battlefield dynamics. It is a UAV world; legacy tech is just living in it.
While Dassault Aviation and Leonardo SpA aren’t major producers of small drones, it is not as though the two are going to be left behind. Leonardo SpA is developing anti-drone defences and electronic jamming systems. This makes sense. Increased drone usage increases demand for counter-UAV technologies, an area where Leonardo SpA’s electronics division is poised to benefit from radar and laser-based drone neutralisation4.
Alliances are the way forward
The surge in European defence spending is expanding the pie for industry, but it’s also intensifying both competition and collaboration among defence contractors. Interestingly, in the realm of UAVs, collaboration is often seen as the fastest way to close capability gaps. Both Dassault Aviation and Leonardo SpA have shown a willingness to team up with traditional competitors or even non-European firms when strategic.
To this point, Leonardo SpA embarked on a joint venture with Turkey’s Baykar Technologies to produce UAVs in Italy to exploit Baykar’s Ukraine combat-proven designs with Leonardo’s sensors and electronics. In a rapid turnaround, the venture plans to deliver its first product (based on Baykar’s Akıncı heavy drone) within 18 months5. And this is unlikely to be a one-off. Leonardo SpA’s CEO recently emphasised “alliances would be the way forward” to boost defence production without excessive new infrastructure6. The underlying theme is straightforward – making more stuff quickly is the goal.
Dassault Aviation and Leonardo SpA find themselves at the nexus of this transformation—bolstered by macroeconomic trends and political resolve and delivering the technologies that will define European security in the coming decades. The unfolding emphasis on UAVs is a microcosm of the broader story: drones have moved from peripheral acquisitions to must-have capabilities. UAV development, in particular, stands out as both a growth avenue and a strategic imperative. Dassault Aviation and Leonardo SpA are leveraging their deep expertise and forging new partnerships to ensure Europe’s militaries have the drones they require.
Conclusion
The narrative? Reallocation and rearmament. The timeline might be best described as “defence for the long run”. The beneficiaries are those positioned to meet Europe’s capability gaps. Dassault Aviation carries the mantle of Europe’s aerospace prowess and is now backed by a strong wind of political will and funding.
Sources:
1World military expenditure reaches new record high as European spending surges | SIPRI
2ECB's Rehn calls for joint European investment in air defence, drones | Reuters
3Dassault nEUROn to fly again, driving France’s new combat drone development - AeroTime
4Leonardo projects €30 billion in revenue by 2029 | Shephard
5Italy's Leonardo, Turkey's Baykar to set up drone joint venture | Reuters
6Leonardo CEO denies talks with automakers on military production | Reuters
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