In 2025, Europe recorded unprecedented defense spending, covering everything from ammunition and battle tanks to air defense systems and naval vessels. Key beneficiaries included Germany’s Rheinmetall, Sweden’s Saab, and the U.K.’s BAE Systems.

France’s Naval Group, however, faced a tougher year, missing out on several contracts. Meanwhile, a collaborative effort between France, Germany, and Spain to develop a next-generation fighter encountered delays, with tensions arising between Dassault Aviation and Airbus, the primary contractors.

While the overall increase in defense budgets benefited many, Defense News local staff highlighted the following industry winners and losers in Europe:

Winners

  • Saab concluded the year on a high note, securing French orders for two GlobalEye early warning aircraft and Poland’s selection of its A26 submarines for the Orka program. Additional 2025 wins included Gripen fighter sales to Thailand and Colombia, short-range air defense contracts for Sweden, Czechia, and Latvia, and electronic-warfare systems for Germany’s Eurofighters. Sweden’s Defence Material Administration also approved continued concept studies for future fighter systems. In October, Saab raised its 2025 organic sales growth forecast to 20–24%.
  • Rheinmetall enjoyed a strong year with multibillion-euro orders and multiyear contracts, including vehicles and ammunition for the German military and Skyranger anti-drone systems for the Netherlands. Its joint venture with Leonardo received Italy’s first order for the Lynx combat vehicle. Rheinmetall also expanded into naval shipbuilding by acquiring a German shipyard and partnered with ICEYE to provide the German Armed Forces with a satellite-intelligence constellation. The company reported a 28% increase in defense sales in the first nine months of 2025.
  • BAE Systems saw significant 2025 successes, including Norway’s selection of its Type 26 frigates in a £10 billion deal. The U.K. defense firm also won major U.S. contracts, such as a $1.7 billion deal for laser-guidance kits for the U.S. Navy, and benefitted from Turkey’s purchase of 20 Eurofighter Typhoons in a deal worth up to £8 billion. Following a strong first-half performance, BAE upgraded its full-year sales and operating profit outlook in July.
  • MBDA, a pan-European missile manufacturer, capitalized on rising air defense demand, with Denmark becoming the third EU customer for its SAMP/T system, choosing it over the American Patriot. France and Italy placed additional orders for Aster missiles, while the company expanded production in France, Italy, and the U.K. MBDA also received a contract to supply a laser weapon system to the U.K. Royal Navy, signaling its expansion beyond missile systems.
  • Global Combat Air System (GCAP) continued progressing despite rival programs facing challenges. Although Japan and Italy expressed concerns about pace and technology sharing, development proceeded steadily under an Italy-U.K.-Japan government office collaborating with industrial consortia. The program aims for delivery by 2035.
  • European Union defense initiatives took shape in 2025 with the first EU defense white paper, a €150 billion loan program for joint procurement under ReArm Europe, the European Defence Industry Programme instrument, and the Defence Readiness Roadmap 2030.
  • KNDS, the French-German armored vehicle manufacturer, benefited from surging land system demand due to the war in Ukraine. The company secured multiple billion-euro contracts for Leopard 2 A8 tanks, initiated new production for the first time since 1992, and received orders for artillery systems including RCH 155, PzH 2000, and Caesar. Its joint venture with Rheinmetall won a €3.4 billion contract to supply over 200 infantry fighting vehicles to Germany and the Netherlands.

Losers

  • Future Combat Air System (FCAS) faced uncertainty in 2025 as France and Germany, alongside Spain, clashed over leadership. Dassault Aviation sought program control, conflicting with Airbus, while concerns over shared technology and slow progress fueled tensions. CEO Eric Trappier’s remarks in December highlighted doubts about the program’s future.
  • Naval Group struggled to secure new contracts, losing key export competitions. Canada chose Hanwha and TKMS for its submarine program, Poland awarded Saab for the Orka submarines, and Norway opted for BAE Systems’ Type 26 frigates. Although Naval Group continued delivering existing orders to French and Greek navies, it reported no significant new foreign contracts in 2025.

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