PARIS — With Europe spending record amounts on defense in 2025 on everything from ammunition to battle tanks, air defenses and naval ships, local industry winners included Germany’s Rheinmetall, Sweden’s Saab and the United Kingdom’s BAE Systems.
France’s Naval Group had a less successful year, missing out on several contracts in 2025, while a joint effort by France, Germany and Spain to develop a next-generation fighter stalled amid infighting between main contractors Dassault Aviation and Airbus.
With the caveat that the rising tide of higher defense budgets lifted most boats, here is a selection of European industry winners and losers picked by Defense News local staff:
Winners
Saab finished the year in style, with France ordering two of the company’s GlobalEye early warning and control aircraft. That’s after Poland selected the company’s A26 submarines for the Orka program in November. Other business in 2025 included Gripen sales to Thailand and Colombia, short-range air defense for Sweden, Czechia and Latvia, electronic-warfare suites for Germany’s Eurofighters and the go-ahead from the Swedish Defence Material Administration to continue concept studies for future fighter systems. The company in October raised its outlook for 2025 organic sales to grow between 20% and 24%.
Rheinmetall had another banner year with billions of euros worth of orders and multiyear contracts, including vehicles and ammunition for the German armed forces and Skyranger anti-drone cannons for the Netherlands, while its joint venture with Leonardo booked the first order from Italy for the Lynx combat vehicle. The firm increased its defense footprint, buying a German shipyard to expand into warships, and winning an order with partner ICEYE to supply the German Armed Forces with a satellite-intelligence constellation. Rheinmetall’s defense business sales rose 28% in the first nine months of 2025.
BAE Systems’ wins in 2025 included Norway’s selection of the British Type 26 frigates, primarily manufactured by the company, in a £10 billion deal. The U.K. firm was also one of the few European companies to win significant contracts in the United States, including a $1.7 billion contract for laser-guidance kits for the U.S. Navy, and was a main beneficiary of the sale of 20 Eurofighter Typhoon jets to Turkey in a deal worth as much as £8 billion. BAE raised its full-year sales and operating profit outlook in July after a “strong operational performance” in the first half.
Pan-European missile maker MBDA benefited from European spending on air defense in 2025, with Denmark becoming the third EU customer for the SAMP/T air-defense system, picking the MBDA-led weapon over the American Patriot. France and Italy placed additional orders for Aster missiles to replenish stockpiles. The company expanded missile production capacity across France, Italy and the U.K. in response to government demand, with air and missile defense identified as a priority capability by the EU and NATO. MBDA won an order to deliver a laser weapon system to the U.K.’s Royal Navy, as the company expands beyond missiles.
The Global Combat Air System (GCAP) continued to forge ahead in 2025 even as rival programs faltered. Commenting in November on the news emerging from the sixth-generation, tri-nation fighter effort, veteran analyst Bill Sweetman wrote in The Strategist: “The silence is deafening”, and he meant it as a compliment. The partners may have had some gripes, as Japan reportedly complained the program is moving too slowly and Italy claimed the U.K. is not sharing all its technology, but otherwise development has moved ahead quietly and apparently steadily, with an Italy-U.K.-Japan government office now working alongside industrial consortia dedicated to sensors, propulsion and integration. The first hiccup could come if and when other nations want to climb on board as the program heads towards its 2035 delivery date.
European Union defense policy took shape in 2025 with publication of the bloc’s first defense white paper in March and adoption of a €150 billion loan program for joint defense procurement by member states under the ReArm Europe plan, tying EU defense policy to major fiscal instruments. Other milestones included political agreement on the European Defence Industry Programme instrument and adoption of the Defence Readiness Roadmap 2030 in October.
French-German armored vehicle maker KNDS benefited from surging European demand for land systems in response to the war in Ukraine, winning multiple billion-plus contracts for the Leopard 2 A8 main battle tank and announcing the first new production of the venerable behemoth since 1992. KNDS artillery was also in demand, with new orders for the RCH 155 howitzer and ongoing deliveries of the PzH 2000 and Caesar systems. The company’s joint venture with Rheinmetall in October won a €3.4 billion contract to supply Germany and the Netherlands with more than 200 infantry fighting vehicles based on the Boxer wheeled chassis.
Losers
As the EU worked hard in 2025 to prove the bloc could spend more and better on defense by countries teaming up, two major member states bucked the trend by squabbling for most of the year over how to build a new fighter jet. The fate of the long stalled Future Combat Air System program, or FCAS, teaming France and Germany as well as Spain, looked ever more uncertain in December when Eric Trappier, CEO of French firm Dassault said “Will it happen? I don’t know.” Dassault has been seeking leadership of the program in a rebuke of Airbus, which is bristling at France’s longstanding suspicion of joint programs and proposals that Germany and Spain limit themselves to handling the drones that will fly alongside the fighter.
Naval Group faced a challenging year in 2025 in terms of securing new business, losing several major export competitions. Canada selected Hanwha and TKMS as the qualified suppliers for its new submarine program, while Poland awarded the Orka submarine contract to Saab. In Norway, the French shipbuilder lost a bid for new frigates to BAE Systems’ Type 26 design. While Naval Group continued to execute on existing build programs, delivering frigates to the French and Greek navies, the company had no new large-scale foreign contracts to report for the year.
Rudy Ruitenberg is a Europe correspondent for Defense News. He started his career at Bloomberg News and has experience reporting on technology, commodity markets and politics.
Tom Kington is the Italy correspondent for Defense News.
