Leonardo (LDO) secures Italian government approval for Baykar UAV joint venture
Leonardo has received conditional Italian government approval for a 50/50 joint venture with Turkish company Baykar, aimed at producing unmanned aerial vehicles (UAVs). This partnership, initially announced in March 2025, seeks to bolster the European drone industry, targeting a market estimated at approximately $100 billion over the next decade. Concurrently, Leonardo and UAE-based EDGE have detailed plans for their own joint venture, which will focus on developing and commercialising advanced sensors and defence systems, with an ambitious goal of securing over €4 billion in orders within the next five years. Leonardo shares (LDO) are trading down 2.0% at €51.27 on 18 June 2026.
Strategic Defence Expansion
These initiatives underscore Leonardo's strategy to expand its presence and capabilities in key defence and aerospace sectors through targeted international collaborations. The Baykar joint venture addresses the need to fill gaps in the European UAV industry, while the partnership with EDGE strengthens Leonardo's position in high-technology sensors and systems, crucial for modern military applications. Such agreements represent a tangible step towards diversifying and consolidating the group's technological expertise.
Today's share price movement follows a 1.2% rise in Wednesday's session, which had returned the stock to early-week levels. These recent developments add to a period of activity for the company, which had previously secured €64 million in funding from the European Defence Fund on 12 June, highlighting a consistent commitment to developing new business opportunities and participating in strategic projects at European and international levels.
Why Conditional Approval Creates Uncertainty for Leonardo
Leonardo is a major Italian defence and aerospace company, providing advanced technological solutions to governments and armed forces globally. Its core business involves developing and integrating sophisticated systems, ranging from helicopters, aircraft, and drones to electronic defence systems, sensors, and secure communication platforms. Essentially, Leonardo enables countries to protect their borders and operate in complex environments by selling highly specialised products and services.
Today's movement in Leonardo's stock is primarily a reaction to the Italian government's conditional approval for a crucial joint venture with Turkish firm Baykar, focused on drone production. While this partnership, announced in March 2025, was widely seen as a significant growth catalyst for the European unmanned aerial vehicle (UAV) market, the "conditional" aspect has introduced an element of doubt. Although Leonardo also outlined plans for a separate joint venture with EDGE for advanced defence systems, the market's focus remains on the implications of the Baykar deal's qualified endorsement.
This uncertainty has led to Leonardo's stock trading down 2.0% today, currently at €51.27, compared to yesterday's close of €52.31.
Imagine you've been waiting for the green light on a major business expansion that promises substantial returns. When the approval finally arrives, it comes with caveats: additional permits are needed, and the original plan requires modifications. While not a outright rejection, this conditional status creates questions about extra costs, potential delays, and the ultimate profitability, making investors more cautious than if the approval had been unconditional.
Leonardo
Leonardo S.p.A. (LDO) is a diversified industrial and technology firm operating across Italy, the UK, Europe, the US, and other international markets. Its core activities encompass helicopters for various applications, including battlefield, maritime, and executive transport, alongside comprehensive support and training services. The company also manufactures a range of aeronautical platforms, from trainers and fighters to multi-mission transport and surveillance aircraft. Within defence electronics and security systems, Leonardo develops command and control systems, radars, sensors, optronics, and electronic warfare solutions, extending to cyber security, critical communications, and digital infrastructure. Furthermore, its space division provides geoinformation, satellite communications, ground systems, and navigation technologies, contributing to interplanetary probes and orbiting modules. The company also produces structural composite and metallic components for commercial and military aircraft, helicopters, and unmanned aerial vehicles, in addition to automating airport baggage handling and logistics hubs. Founded in 1948, Leonardo S.p.A. is headquartered in Rome, Italy.