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Defense Stock Roundup: Sikorsky, Turkey Sign Helicopter Deal; Boeing Clinches Apache Contract

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As the world security map has changed in the recent past, the need to revamp defense capabilities has been urgently felt by most nations. To that extent, Turkey as well as the Danish government has collaborated with their U.S. counterpart for boosting domestic security.

Such a trend also encourages more foreign military sales ("FMS") for U.S. based aerospace and defense companies. Last week, major contractors Lockheed Martin (LMT - Free Report) and Boeing (BA - Free Report) scooped up a few FMS awards.

Nevertheless, a high level of market volatility led most defense stocks to trade in the red over the past five sessions. Both the Dow Jones U.S. Aerospace & Defense Index as well as the S&P 500 Aerospace & Defense (Industry) registered timid growth of less than 1% in the past five trading days.

(Read Defense Stock Roundup for Jun 7, 2016 here.)

Recap of the Week’s Most Important Stories

1.    Turkey’s undersecretariat for defense industries has selected five major companies to manufacture and deliver T70 helicopters as part of the estimated $3.5 billion TUHP-Turkish Utility Helicopter Program.

Per the agreement, 109 utility helicopters will be built for the Turkish land, air, gendarmerie and police forces, with Turkish Aerospace Industries (TAI) playing the role of the prime contractor and Lockheed Martin’s Sikorsky unit serving as a major subcontractor. Three major Turkish aerospace contractors – Alp Aviation, Turkish Engine Industries (TEI) and Aselsan – have also been selected as subcontractors.

As part of the program, Sikorsky's S-70 type Black Hawk will be modernized with Turkish systems and will be called T-70 Black Hawk. Sikorsky's S-70 Black Hawk is one of the best-selling utility helicopters in the world.

2.    In a separate development, Lockheed Martin Corp. is all set to win another major contract for its F-35 fighter jet. The Danish government reached an agreement on Jun 9 with coalition parties to go ahead with the purchase of 27 F-35A stealth fighter jets from Lockheed Martin.

The latest agreement follows a May 12 announcement by the Prime Minister regarding the acquisition of 27 fighter jets worth 20 billion Danish crowns ($3.1 billion).

The coalition agreed on the fact that the Danish air force’s international presence will be circumscribed in the period spanning 2022–2026 owing to the changeover from the old F-16 jets. The country’s air force will not be able to take part in international operations between 2022 and 2024.

3.    The Boeing Co. has won an undefinitized fixed-price-incentive contract, worth $667.5 million, from the U.S. Army. This is mainly an FMS contract for Qatar. Contracting activity is the Army Contracting Command, Redstone Arsenal, AL.

Per the contract, Boeing will provide 24 AH-64E Apache helicopters, one Longbow crew trainer, equipment for ground support, and Thales radios.

Boeing’s Apache, with a cruising speed of 279 kilometers (over 150 knots) per hour, is a twin-engine, four-bladed, two-pilot, multi-role combat helicopter that secured high ratings for engine competency and weapons load. Apache has also been noted for its target acquisition potential.

4.    Northrop Grumman Corp.’s (NOC - Free Report) Space & Mission Systems business unit has secured a modification contract from the missile defense agency to extend the period of performance of task orders. The contract is valued at $600 million. With this extension, the total contract value goes up to $3.85 billion from $3.25 billion.

Per this modification contract, Northrop Grumman will continue to provide the agency as well as the Department of Defense enterprise-level technical integration and Ballistic Missile Defense System-(BMDS) level operational integration products and services.

5.    Raytheon Company has signed a new strategic sourcing agreement (“SSA”) with Aerojet Rocketdyne, a subsidiary of Aerojet Rocketdyne Holdings, Inc. . The SSA is designed to assist the Pentagon in achieving the goals of its Better Buying Power 3.0 initiative.

Per the deal, Aerojet will act as a principal and long-term supplier of Raytheon's legacy portfolio of propulsion systems and energetics products for key weapons programs, the companies announced.

The partnership will help achieve the objectives of the Pentagon's Better Buying Power 3.0 initiative, which emphasizes greater efficiency in acquisitions, Raytheon Missile Systems President Dr. Taylor W. Lawrence said in a statement. The agreement means the two companies will jointly pursue affordability initiatives through 2019.


Equity markets took a beating last week with major defense stocks trading in the red. Though Raytheon and L-3 Communications Holdings were exceptions, they displayed weak gains. Textron Inc. (TXT - Free Report) lost the most followed by Rockwell Collins .

The past six months have a mix of gains and losses. L-3 Communications Holdings was in the leading position while Boeing was the biggest loser.

The following table shows the price movement of the major defense players over the past five trading days and during the last six months.


Last Week

Last 6 months

























What’s Next in the Defense World?

Northrop Grumman and L-3 Communications will attend Citi's 2016 Industrials Conference on Jun 15, 2016, in Boston.

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