Leonardo shares tumble amid German doubts on frigate contract and GCAP expansion

Shares of European defence companies fell sharply after reports that Germany is reconsidering the multi‑billion‑euro F126 frigate contract. The rumor, cited by the Financial Times, sparked a sell‑off in Italy where Avio dropped more than 5% and Leonardo slipped about 3.6% on the Milan exchange. The same concerns spread to other German defence stocks such as Rheinmetall, Hensoldt and Renk, and to British BAE Systems and Swedish Saab.

Leonardo CEO Lorenzo Mariani told the Financial Times that while Germany’s possible entry into the Global Combat Air Programme (GCAP) could bring long‑term financial and technical benefits, it would also be “disruptive” and could delay the project. He noted that the consortium currently includes Italy, the United Kingdom and Japan. The market reacted to these mixed signals, with Leonardo falling 5.4% and BAE Systems down 2.5% in European trading.

The episode highlights the sensitivity of defence‑sector equities to Germany’s defence‑spending decisions and to the evolving composition of multinational military‑aircraft programmes.