By Giulia Segreti
ROME (Reuters) -Italy’s Avio will direct most of an upcoming capital hike to the development of a new U.S. facility, with the remaining funds aimed at boosting its European production capacity, the CEO of the rocket maker told Reuters on Thursday.
“We are in industries – the space and defence ones – that have a substantial imbalance between demand and supply so we decided to invest in capacity. Business is picking up even faster in the U.S., where there is high demand for missiles, essentially,” CEO Giulio Ranzo said.
A planned 400 million euro ($466.48 million) capital hike was approved unanimously on Thursday by the group’s shareholders, including aerospace and defence group Leonardo, which holds a share of just under 29% but has still not said whether it will participate in the capital increase pro quota.
Ranzo said 80% of the proceeds from the capital hike would be dedicated to a U.S. factory, which will produce solid rocket motors for missiles. Construction will start in the first quarter of 2026 and it will be operational by early 2028.
The remaining funds will be used to boost production capacity in Europe, for both its space activities, where it wants to speed up the flight schedule for the Vega-C rocket, and propulsion technologies for missile systems.
The group will also invest in its suppliers, with the possibility of acquiring some of them. “We need to make sure that the world of our suppliers does not become a bottleneck to growth,” Ranzo said.
As a result, the group’s defence business, which now represents 20% of its revenues, will rise to 60% by 2035.
A FURTHER 10%
Should demand in the U.S. be higher than expected, the group is open to investing more than currently planned as shareholders approved the possibility of an additional capital increase by another 10% in the next five years.
Avio USA CEO James Syring told Reuters that the group plans to enter the U.S. market “going after initially about a third of the unmet demand”.
The company is planning to compete for upcoming tenders in the country, Syring said, adding to two key contracts won in 2024 with the U.S. Army and RTX’s defence arm Raytheon.
The new plant will start with small motors but “we have sized the factory to go up to (solid rocket motors) 50 inches (127 cm) in diameter and 10 meters (32.8 ft) in length,” Syring said.
“We feel it’s important to not just have defence tactical motor capability, but be able to compete long term for (all sizes) up to strategic size,” he added.
($1 = 0.8575 euros)
(Reporting by Giulia SegretiEditing by Marguerita Choy)
