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Europe’s Future Combat Air System (FCAS), a more than $110 billion plan to replace the Dassault Rafale and Eurofighter Typhoon models with a sixth-generation advanced system, is edging towards a massive European industrial breakup. With Airbus and Dassault currently locked in a leadership and workshare fight over the core next-generation fighter program, it appears that Airbus is approaching the point at which it has had enough.
Industry sources highlight that Airbus is now openly preparing for outcomes that range from two closely related aircraft to a complete Franco-German divorce. The immediate question for governments is whether to preserve common architecture (drones, data links, and cloud) while letting France and Germany (or Spain) pursue separate aircraft. They could conversely accept years of delays and rising dependence on US-built platforms like the Lockheed Martin F-35 Lightning II.
Airbus Is Fed Up
Airbus has elected to escalate its messaging after another round of fighting within the FCAS program. Airbus CEO Guillaume Faury has said that Airbus could develop a fighter jet alone if forced, all while calling for a cooperative European outcome. He continues to signal support for a two-fighter workaround. A French-led jet and a German and Spanish-led jet could potentially share large parts of a wider architecture, allowing for the two different companies to build different models while maintaining some kind of synergies.
At the heart of this fight is the Next Generation Fighter pillar, where Airbus and Dassault clash over leadership, workshare, and technology rights. Dassault and Airbus have both seen consistent growth in their defense businesses. Germany’s chancellor has publicly questioned whether a nuclear-capable design matches German requirements, and Germany is reportedly weighing extra Lockheed Martin F-35 Lightning II jets as a hedge. A near-term decision made by France, Germany, and Spain now looks unavoidable in order to unlock the next phase of this fighter jet’s development.
Broad Impacts For The European Defense Industry
For the European defense industry, an FCAS split would be a warning and a catalyst for turmoil that would follow, according to Reuters. On the one hand, two separate fighters would lead to higher research costs, testing expenses, and longer certification work, diluting the overall benefits of scale and raising the odds that one line slips or gets canceled under budget pressure. It would also harden the continental fault line between national champions and genuinely integrated programs.
This comes at a time when European governments are trying to accelerate rearmament and reduce overall reliance on American-made equipment. On the other hand, a modular split could keep the momentum going, as it would allow the drone, sensor, and combat cloud pieces to proceed while the manned-fighter dispute continues to be ring-fenced.
If structured around shared standards and interfaces, Europe could still end up with interoperable systems, while opening the door to additional partners or export-aligned variants. The key risk here is ending up with two incompatible ecosystems that lock in fragmentation for decades. This will only weaken European bargaining power with suppliers. These are all key questions for investors to evaluate over the next couple of months.
Spain Rules Out F-35, Looks Instead To European Alternatives
Here’s why Spain will be shunning Lockheed Martin’s F-35 for the future of its air defense fleet, and how it will impact the country.
Airbus Is Undoubtedly Flexing Its Industrial Might
When it comes to Airbus, the FCAS drama is a classic situation where investors and the company’s board have to consider if there could be a strategic upside to splitting off the company’s jet development programs. If Airbus ends up leading a German/Spanish-led fighter program and keeps major roles in the world of drones, sensors, and the combat cloud, it can lock in decades of high-value defense work, improve visibility in Defense & Space, and benefit from Europe’s broader cycle of rearmaments.
That narrative can support the company’s valuation, especially if investors see defense as a stabilizer where the commercial side of Airbus’ business remains much more cyclical. The downside is thus near-term uncertainty and a high-level concentration of risk. A split could likely mean duplicated development spending, more political scrutiny, higher fixed costs, and program delays, exactly the kind of margin volatility that markets will try to punish.
Headlines may create noise, but the stock impact will ultimately hinge on whether governments make a clean decision soon, how risk-sharing is structured, and whether Airbus can win a clear lead role without absorbing disproportionate cost overruns. All of this comes as the company’s recent earnings underperformed analyst expectations.
