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Defense · Frigates · Germany · Stocks
Germany formally canceled the F126 frigate program, originally awarded to Damen and later Rheinmetall's NVL division, due to significant delays and projected cost overruns exceeding €18 billion, causing Rheinmetall shares to plummet 16.7% while shifting the contract to TKMS for eight Meko A-200 frigates.
The F126 program, initiated in 2020, had already incurred over €2 billion in spending, with Rheinmetall offering in May to complete it for €12.8 billion, as reported by Der Spiegel. Germany's defense ministry cited "significant delays, huge cost overruns and unforeseeable risks" for the termination, noting the project's cost had ballooned from an initial €10 billion to over €18 billion.
Berlin will now procure eight Meko A-200 frigates from Thyssenkrupp's marine division TKMS for an expected total budget of €11.6 billion, with the first four costing €6.3 billion and an option for four more at €5.3 billion. This decision sent Rheinmetall shares down as much as 16.7%, marking its sharpest daily fall ever, while TKMS's stock surged 8.2%.
TKMS confirmed it had begun preparatory work in February and expects to deliver the first Meko A-200 frigate in 2029. This event occurs amid broader European defense rearmament challenges, including the scrapped Franco-German FCAS fighter jet and delayed MGCS tank programs, highlighting intense competition within the German naval industry, where both TKMS and Rheinmetall are vying to acquire German Naval Yards Kiel.
