Leonardo’s New Divisions Emerge But Branding Not Quite Settled

 - May 13, 2016, 7:31 AM

The reorganization of Finmeccanica into seven divisions is done, but the rebranding of Italy’s major aerospace company as Leonardo is still a work in progress. Full-year results for 2015 suggest that the company derives more than half of its total €13 billion ($14.8 billion) revenue from defense. It has operations in 15 countries and claims to have sold products or systems to nearly 150 nations. 

According to a senior group official, the aircraft division may yet retain the Aermacchi and Alenia brand names for key products: the SF-260/M345/M346 training aircraft and the C-27 airlifter. This division also includes the company’s share of the AMX, Tornado and Typhoon combat jet programs. It has also produced the Sky-X and Sky-Y UAS demonstrators, and is part of the pan-European Neuron UCAV demonstrator industrial team. The company’s 50-50 joint venture with Airbus for regional transport aircraft, ATR, is also part of the aircraft division. Together with the aerostructures division, which builds sections of the 767/777/787 for Boeing and the A320/A321/A380 for Airbus, Leonardo’s aeronautics activities provided 24 percent of the total group turnover in 2015.

The helicopter division is retaining the AW designations for most of its key products, such as the AW101/139/159/169/189 and the 609 tiltrotor. It also produces the Super Lynx 300 and has a share of the pan-European NH90. This division also includes the Polish subsidiary PZL-Swidnik, and the U.S. production line in Philadelphia, as well as the former Agusta facilities in Vergiate and Tessera, and the Westland factory in Yeovil, UK. It accounted for 34 percent of group revenue last year, and has the highest order backlog, at €11.8 billion ($13.5 billion).

The airborne and space systems division is the most diverse, and the second-largest by turnover. It includes the former Selex ES activities such as airborne radars, electro-optics, electronic warfare and lasers. The avionics portfolio includes flight controls, autopilots, displays and comms/navigation systems. More than half of the division’s activities are UK-based, employing more than 7,000 people. This division provides significant content to F-35, Gripen and Typhoon combat aircraft, and Apache and Chinook helicopters, as well as to platforms produced by the group, including the M346, AW101 and AW159. The Falco UAS also belongs here, as does the partnership with Piaggio on the unmanned P1HH version of the Avanti. The Mirach target drones that have been sold in 40 countries are another product of this division. Space products include specialized payloads, powerplants and robotics for such systems as the Galileo navigation satellites and the Cosmo-SkyMed surveillance system.

The other three divisions are involved almost exclusivelyin ground-based and marine activities. Land and Naval Defense Electronics includes air defense and shipborne radars, and C4I systems. Defense Systems includes the subsidiary previously named OTO-Melara and produces weapons including artillery, ammunition and torpedos. Security and Information Systems provides IT and communications networks, including ATC management.

Although it is the 100 percent owner of DRS Technologies, a diversified U.S.-based supplier of defense and intelligence products and services, the DRS name may have to be retained, the senior group official said. In addition to the ATR joint venture, Leonardo also has two joint ventures with Thales for space activities, and has a 25 percent shareholding in European missile house MBDA.

Although aspiring to global status, Leonardo remains essentially Italian, as recognized by the new brand name. More than 60 percent of the workforce is in Italy, and 50 percent of the shareholding is unequivocally Italian; 30 percent is held by the government and 20 percent by retail investors in that country. Institutional investors hold the other 50 percent.