by Eric J. Lyman
ROME, Sept. 28 (Xinhua) -- Leonardo, the Italian aerospace and defense company, this week announced it was part of a 2.4 billion U.S. dollar contract to provide the United States Air Force with 84 helicopters starting in 2021. Analysts said the development was part of a trend of success for big -- but not dominant -- Italian companies.
Leonardo, which until two years ago was known as Finmeccanica, is one of the world's ten largest defense contractors. But it has never been among the first tier of such companies.
That is more or less in line with important Italian players in export-driven fields such as luxury goods, food, and automobiles.
"Some Italian companies have been very successful in a certain niche, and that is the case with Leonardo," Andrea Giuricin, an expert on public finance and mobility management at the University of Milan Biocca, told Xinhua. "These companies grow to a certain size, medium-sized multinationals, and then they can't figure out how to grow to the next level."
Leonardo is unusual in that, unlike other mid-sized multinationals -- such as carmaker Ferrari, fashion house Giorgio Armani, eyeglass maker Luxottica, or chocolatier Ferrero -- it is technology driven.
Italian high-tech companies like Olivetti and Telecom Italia have often stumbled in the past. Olivetti was an early leader in the computer market; while Telecom Italia, the former state telecommunications monopoly, is now a regional telecommunications player after once holding global ambitions.
"Leonardo is an important company, but it cannot cover as many areas as a giant like Airbus," Giuricin said.
Leonardo is a junior partner in the deal with the United States Air Force, with U.S.-based Boeing in the role as a lead contractor. Leonardo will provide its AW 139 helicopters to Boeing, which will modify them and then deliver them as MH 139 aircraft. The helicopters will be assembled at a Leonardo plant located in the United States. Both companies issued statements praising the deal.
Gabriele Gambarova, an equity analyst with Banca Akros, said in an interview that Leonardo looks at its helicopter division as the company's "crown jewel." The other divisions of the company, including divisions producing defense security systems, satellite equipment, and aeronautics, have struggled.
The name change from Finmeccanica to Leonardo was part of a larger restructuring plan aimed at improving the company's bottom line.
A big factor working in Leonardo's favor, Gambarova said, is that the company invests heavily in research and development. On average, Italian companies spend a smaller percentage of their revenue on research and development than their counterparts in most other European countries.
"Leonardo has to be aggressive to remain on the cutting edge," Gambarova said. "That requires heavy investing in new technologies."
The MH 139 will replace some of the U.S. Air Force's workhorse Huey helicopters in use by the military in some form since 1970, now in use to protect domestic U.S. bases.
