Germany Scraps F126 Frigate Program: Rheinmetall Takes a Hit

Germany's defense ministry has cancelled the F126 frigate program, dealing a significant blow to Rheinmetall as shares dropped by over 16%. Instead, the ministry will focus on acquiring Meko-class frigates from TKMS, which saw a stock price increase. This change underscores major shifts within European defense procurement strategies.

Rheinmetall's shares plummeted over 16% on Wednesday after Germany's defense ministry decided to cancel the F126 frigate project, where Rheinmetall played a major role. By 0906 GMT, the shares were down 13%, marking a record drop, while German shipbuilder TKMS saw its stocks soar by 9.8%, hitting a peak not seen since April 2026, according to data from the stock exchange.

Reports from Der Spiegel and the Financial Times revealed Defense Minister Boris Pistorius' plan to withdraw from the F126 project in favor of Meko-class frigates by TKMS. The decision comes as the cost of continuing with Rheinmetall, following its acquisition of Naval Vessels Luerssen, would escalate the contract for six F126 vessels beyond €18 billion. This figure includes a €15.2 billion contract with NVL.

While Rheinmetall remained tight-lipped, TKMS expressed enthusiasm about enhancing the German navy's capabilities. Preparatory work for the Meko A-200 frigate began in February, with the first delivery set for 2029. The defense ministry announced its intent to acquire eight Meko frigates, primarily for anti-submarine operations, allocating €6.3 billion for the first batch of four, and a further €5.3 billion for four additional ships, contingent on a decision by the end of 2026.