On the leadership change at Leonardo, which sees the current CEO Cingolani leaving and Mariani, from Mbda, taking over, some further considerations.
The government could have managed the issue much better from a communication standpoint. It is their right to appoint the leadership and therefore, also to anticipate criticism, they could have more clearly explained the reasons for their choices.
However, the intensity of the debate over these two days is surprising, in which a series of senseless absurdities have been said. Among many, the Government would have replaced Cingolani under pressure from the United States, as the Michelangelo Dome is not well regarded and Leonardo’s sixth-generation fighter Gcap would compete with the F-35.
On the first point, a small piece is missing: Michelangelo Dome, to date, has not generated concrete support or a critical mass comparable to other European initiatives. Meanwhile, an alternative has already been launched, the European Sky Shield Initiative, which includes Albania, Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Latvia, Lithuania, Norway, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Sweden, Switzerland, Turkey, Hungary, and the United Kingdom. In other words, if the United States had an interest in exerting pressure, the issue would rather concern initiatives with real political and industrial traction, not projects that are still struggling to consolidate.
There is also a small detail: Michelangelo Dome intends to function as a sort of “Uber” of air defense, allowing different hardware systems to operate together. Technologically it may also be plausible. But politically, how realistic is it that countries like Germany or the United Kingdom integrate into a system developed by a third country that ultimately controls its architecture?
On the second point, we have already purchased the F-35, a fifth-generation aircraft operational for over a decade. It is therefore not clear how a possible sixth-generation fighter, still under development, could represent an immediate problem.
There is also a more relevant aspect: the issue of relations with the United States. Leonardo is present in the American market through Leonardo DRS, in a context where the largest defense companies in the world operate. It is legitimate to question how much transatlantic dynamics weigh, but imagining direct and ultimatum interventions risks oversimplifying a reality rather made of industrial incentives, market access, and interoperability.
There is also an often overlooked element: the weight of Leonardo DRS. DRS is worth about 12 billion dollars on the stock market, while Leonardo capitalizes about 32 billion euros and controls 72% of it. Any scenario that would substantially jeopardize this presence in the United States would have significant consequences on the industrial and financial balance of the group. Also for this reason, the relationship with the American market and institutions must be read in structural terms, rather than through hypotheses of episodic pressures.
As said yesterday, under Cingolani Leonardo had a very positive performance, exceeding the benchmark index. It is not only his merit, but certainly it is also his merit. No one can accuse me of anti-capitalism, but I believe it is necessary here to clarify an essential point. Should the government maximize the return on investments or pursue the strategic interests of the country? In the first case, the government would be a sort of investment fund. In the second, it must put national security before economic returns. I have no way to evaluate in detail the policies of the current government, but let’s understand what it means to maximize return in the defense sector: in abstract, it would mean expanding sales even to problematic actors, including potential adversaries, who could then use them against us.
It is an extreme example, but it serves to clarify the trade-off. All this brings us to the last point. A defense company executes what its clients request. More than criticizing the non-renewal of Cingolani, there was (and still is) room to discuss the defense policy of the current government. However, this debate has been little seen. The current government has focused on a significant increase in industrial production and Leonardo, consequently, has initiated a series of agreements and acquisitions. However, four years after the start of the war in Ukraine, despite an extremely solid financial performance, this does not yet seem to have translated into a proportionate and visible increase in production. To give a comparison, in the same period, new entities like the German Helsing — founded in 2021 — have reached valuations amounting to 40% of Leonardo’s capitalization producing drones and operational capabilities.
