Counterpart still working to secure domestic subsidies for operation, with summer deadline for agreement.
Leonardo continues working towards a mid-year decision on the formation of a joint venture to take on its aerostructures business, with its partner still attempting to secure domestic incentives for its part of the operation.
Although the performance of the aerostructures unit is headed in the right direction – delivering year-on-year revenue and EBITA improvements during the first quarter – chief financial officer Giuseppe Aurilio said it would still create a “cash drag” of more than €100 million ($117 million) for the full year.
To address the long-standing issues with the operation, Leonardo has been attempting to spin out the business into an international joint venture.
It flagged in March that its partner was attempting to secure financing “related to the funding of local activities”, says Aurilio. “It is an essential part of the plan – a funding agreement they need to get from their country.”
These hinge, says departing Leonardo chief executive Roberto Cingolani, on securing “ministerial incentives” from its partner’s home nation, which will require a new law in place, with the window for that legislation closing in late June or early July.
Noting that Leonardo is not part of these discussions, Aurilio points out that the Italian firm has “set a summer window for a go/no-go decision”, with its prospective partner continuing to work towards that deadline.
But in a nod to the likely location of its counterpart – rumoured to be Saudi Arabia – he says “we can imagine this [timeframe] may be affected by some countries of the world”.
Cingolani is less circumspect, however, adding: “We know the situation in the Gulf is difficult but we don’t think it will change the deadline [for] their incentive law.”
Nonetheless, the due diligence conducted by both sides has thrown up no issues: “We could start tomorrow,” he claims.
During the three months ended 31 March, Leonardo’s aerostructures business recorded an EBITA loss of €45 million on revenues of €222 million – 19% and 48% improvements, respectively, on the same period last year.
The positive trend was driven by higher production rates on the Boeing 787, for which Leonardo supplies centre fuselage sections and horizontal stabilisers.
Aurilio says it is now delivering eight shipsets to Boeing each month, up from seven at the start of the year and four during the first quarter of 2025.
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