The merger, the financial details of which were not disclosed, comes as companies like Elon Musk's Starlink and Amazon's Project Kuiper are racing to deploy satellite networks for internet and other services.
The three companies said the merger aims "to strengthen Europe's strategic autonomy in space, a major sector that underpins critical infrastructure and services related to telecommunications, global navigation, earth observation, science, exploration and national security".
It would not include space launchers such as Airbus's Ariane rockets.
Annual revenues for the combined group were estimated at 6.5 billion euros ($7.5 billion) based on current operations, and its order backlog would represent over three years of projected sales.
If approved by regulators, the new company would be operational in 2027, with Airbus owning a 35 percent stake while Thales and Leonardo would hold 32.5 percent each.
The companies build, deploy and service a range of telecommunications and navigation satellites that will underpin the rollout of high-speed networks worldwide.
"This partnership aligns with the ambitions of European governments to strengthen their industrial and technological assets, ensuring Europe's autonomy across the strategic space domain and its many applications," the CEOs of each company said in a joint statement.
France, which along with Germany and Spain owns minority stakes in Airbus, called the deal "excellent news".
"The creation of a European satellites champion will increase investments in research and innovation in a strategic industry and reinforce our European sovereignty in an area of intense global competition," the French finance ministry said in a statement.
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