German Defense Minister Boris Pistorius
Construction of six frigates was the German Navy’s largest post-war defense project. The project consumed 2.3 billion euros without any vessels being delivered.
Alleging high costs and delays, Germany canceled the largest defense project in the history of its Navy: the construction of six F126 frigates.
The information was confirmed on June 24, by the Ministry of Defense, following news published by the British newspaper and the German magazine Der Spiegel.
The announcement sent the company’s shares plummeting. Rheinmetallthe country’s main defense company and the largest ammunition manufacturer in Europe, named as the favorite for the contract.
Plans to build the frigates had been facing difficulties for some time, with Berlin evaluating whether to transfer the contract to Rheinmetall’s NVL division, after the initial supplier, the Dutch group Damen Schelde Naval Shipbuilding (DSNS), was unable to meet deadlines and budgets.
The ministry claims that transferring the contract from DSNS to NVL, whose initial cost was estimated at around 10 billion euros, would now cost more than 18 billion euros.
Furthermore, according to the German Defense Minister, Boris Pistoriusthe F126 project has already consumed around 2.3 billion euros since the order was placed in 2020. But, if it were transferred to NVL, the government would have to waive a compensation claim against DSNS.
Instead of the F126 frigates, Berlin will opt for eight smaller Meko A-200 frigates, from Thyssenkrupp’s TKMS naval division, for an estimated value of 11.6 billion euros, partially confirming previous plans.
For the first four vessels, the Government will pay 6.3 billion euros, with an option to purchase four more for 5.3 billion, if exercised by the end of 2026.
In March, the ministry still planned to acquire only four of these vessels. They were a provisional solution to fulfill NATO commitments to combat submarines from 2028 onwards, with deliveries scheduled from the end of 2029.
“It’s excellent news, certainly for us,” said the executive president of TKMS, Oliver Burkhard, this Wednesday in a video published on LinkedIn, leaving open the possibility of including industrial partners who lost the F126 project, without providing details.
Rheinmetall shares fell by as much as 20%, wiping out more than 11 billion euros from its market value — the lowest level in almost 15 months. The group expanded its operations in naval defense last year, with the purchase of NVL. Rheinmetall is also competing with TKMS for the acquisition of German Naval Yards Kiel, a smaller competitor.
Analysts at JP Morgan said the decision means Rheinmetall “will probably not reach its order intake target” in 2026, set at 80 billion euros.
Berlin and Paris, at a time of European rearmament efforts, canceled the joint FCAS fighter project and the MGCS tank program is about a decade behind schedule. Franco-German tank manufacturer KNDS detailed this Wednesday plans to go public in Frankfurt and Paris, an operation that, according to sources cited by Reuters, could value the company at around 15 billion euros.
