Germany’s planned cancellation of the F126 frigate programme sent Rheinmetall stock down as much as 13% in morning trading, dragging defense stocks across Europe lower as Berlin moved to scrap what would have been its largest warship commission since the Second World War.
The Financial Times first reported the cancellation plan, citing two people familiar with the matter. The programme, which grew to cover six frigates after the Bundestag approved two additional vessels in June 2024, carried a total contract value of approximately €9.8 billion, according to ESUT.
Rheinmetall Leads Market Selloff
Rheinmetall’s drop was the sharpest among European defense names. German-listed Hensoldt fell 5% and Renk declined 3.8%. Sweden’s Saab traded 3.1% lower, Italy’s Leonardo shed 3.7%, and BAE Systems fell 1.6%.
The selloff reflects the scale of what is being lost. Reuters reported that Rheinmetall had sought approximately €12 billion ($14 billion) from the German government to take over the troubled programme, a bid that now appears to have been rejected.
The F126 Frigate Cancellation and Its Roots
The original F126 contract for four frigates was signed in June 2020. The Bundestag’s budget committee conditionally approved two more in June 2024, with the contract for the additional pair signed on 19 June 2024, according to Naval News.
The F126 was designed to replace Germany’s aging F-123 Brandenburg-class frigates. Its builder, Damen Shipyards, beat out ThyssenKrupp Marine Systems (TKMS) for the original award. TKMS’s exclusion was widely attributed to the troubled delivery of the earlier F-125 Baden-Württemberg frigate, which suffered delays and structural issues, according to the Defense Security Monitor.
TKMS has since re-emerged as the likely alternative. Germany concluded a preliminary agreement with the company on 3 February 2026 to build three MEKO A-200 frigates for the German Navy. The preliminary agreement initially covered procurement work up to €50 million through end of March 2026, Jane’s reported.
Each MEKO A-200 frigate is priced at approximately €1 billion, with the first vessel expected to be delivered as early as 2029 and the other two within the following 12 months, according to Navy Leaders.
The German Bundestag has already moved to fund a transition. It approved a €7.8 billion financial package for a potential alternative platform to the F126, with €724.7 million from the Bundeswehr special fund earmarked for 2026, €878.2 million as commitment authority for 2027, and €6.2 billion as commitment authority from the core budget covering 2028 through 2033, according to the official Bundestag press release.
The F126 frigate cancellation and the pivot to TKMS leave Damen Shipyards exposed on one of Europe’s largest naval contracts, while the timeline for replacing Germany’s Brandenburg-class frigates now hinges on whether the MEKO A-200 preliminary agreement converts into a full procurement deal.
