Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Italy’s Leonardo is close to agreeing a production partnership with Turkish drone manufacturer Baykar, which is co-owned by Selçuk Bayraktar, a son-in-law of President Recep Tayyip Erdoğan.
People with knowledge of the discussions said the two companies were set to sign a memorandum of understanding as soon as next week shaping the terms of a joint venture that could significantly boost Europe’s drone production capabilities. Baykar is one of the world’s leaders in artificial intelligence-enabled drone manufacturing.
Leonardo is part of a trio of defence champions, alongside Britain’s BAE Systems and Japan’s JAIEC, involved in the development of a next-generation fighter jet under the Global Combat Air Programme (GCAP). JAIEC is jointly funded by Mitsubishi Heavy Industries and the Society of Japanese Aerospace Companies.
In October, Mitsubishi and BAE Systems displayed models of unmanned aerial vehicles that could be integrated into the GCAP.
Baykar is best known for its flagship medium-altitude long-endurance combat drone, called Bayraktar TB2. The drone, used by Ukraine in its war against Russia, has gained recognition for its combat effectiveness, and is at the centre of the Turkish group’s success.
It has been purchased by countries including Poland and Qatar. Some 90 per cent of the company’s revenues come from exports, according to its website. In 2023 exports to 35 countries totalled $1.8bn in revenues.
The war in Ukraine has boosted the development of drones and other unmanned systems, changing how wars are fought. Software-defined technologies, in particular drones, are used alongside traditional hardware such as tanks, guns and munitions, to more to enable troops to outsmart the enemy.
Although details of the Italian-Turkish partnership are yet to be agreed, the combination of Leonardo’s technology and Baykar’s platforms could potentially lead to the development of a high-technology drone that could operate on the sixth-generation platform.
In turn, through the partnership, the Turkish family-owned group would gain access to the European market, an expansion it has been targeting for some time.
The Turkish defence contractor last month took over Piaggio Aerospace, established in the late 1990s when investors acquired the aerospace business of Vespa maker Piaggio. “With this acquisition, Baykar is set to expand its influence in the European aviation market,” the company said at the time. It also said it wanted to expand employment at Piaggio Aerospace’s Italian facilities.
Analysts saw the takeover of Piaggio Aerospace as a strategic move by Baykar aimed at overcoming the European import barriers faced by Turkish defence companies.
Leonardo and Baykar’s contacts began after the Piaggio deal was close to being finalised, according to one person close to the talks. Leonardo’s chief executive Roberto Cingolani and the Bayraktar brothers have exchanged visits over the past month.
Leonardo declined to comment. Baykar did not immediately respond to a request for comment.
This article has been amended to show that Piaggio Aerospace was formed after investors acquired the aerospace assets from Piaggio.
Read the full article here
