Why Did South Korea Just Order $4.2 Billion in Military Helicopters From Boeing and Lockheed?

Brief bouts of fighting broke out in the Strait of Hormuz this week, with Iran apparently launching drone attacks on commercial shipping, U.S. Navy warplanes responding, and Iran responding to that with an attack on Kuwait. Nevertheless, both sides to the conflict continue to act as if the ceasefire remains intact.

Meanwhile, in South Korea, the government is preparing for the next conflict.

Image source: Getty Images.

Helicopters for South Korea

As the U.S. State Department advised Congress earlier this month, the government of South Korea has made requests to purchase two separate batches of military helicopters and equipment from Boeing (NYSE: BA) and Lockheed Martin (NYSE: LMT), respectively.

From Boeing, the Koreans wish to purchase eight AN/APG-78 fire-control radar (FCR) systems, eight Longbow FCR Radar Electronic Units (REUs), 40 AN/ARC-231A VHF/UHF ("very high frequency" and "ultra high frequency") radios, and a whole series of related gear. This equipment will be installed to upgrade its fleet of 36 existing AH-64E Apache attack helicopters, with 36 more on order.

Just as you'd expect for the builder of the Apache, Boeing was named principal contractor on this arms deal and stands to win $1.2 billion in revenue if Congress approves the sale.

In a separate and much larger deal, South Korea has requested permission to purchase 24 MH-60R Sikorsky Seahawk multimission helicopters. Among the related equipment involved in this purchase are 24 Airborne Low Frequency Sonar (ALFS) systems -- indicating that the helicopters will be used primarily for anti-submarine missions.

Lockheed Martin, which acquired Sikorsky from the company then known as United Technologies more than a decade ago, will serve as the principal contractor on this $3 billion defense contract.

Add 'em up: That's $4.2 billion worth of American helicopters and parts heading to South Korea.

How much is $4.2 billion worth to Boeing and Lockheed?

Granted, Congress must approve (or more precisely, fail to pass a "joint resolution of disapproval" of) these arms deals for them to go through. A resolution of disapproval has happened only once in the last 50 years, and never in the last 30, according to a report from the Congress-focused newspaper Roll Call. Statistically speaking, both the Boeing and the Lockheed Martin arms sales are all but guaranteed to sail through Congress -- which means it's probably safe for Boeing and Lockheed investors to go ahead and start counting up revenue and profits today.

In the case of Boeing, $1.2 billion in helicopter parts will be run through the Boeing Defense, Space & Security division, colloquially known as "BDS." Data from S&P Global Market Intelligence shows recent improvements in BDS. Although the division has been losing money since 2022, losses that used to number in the billions of dollars fell to just $128 million last year -- and turned positive in the first quarter of 2026 with a $233 million operating profit, up 50% year over year.

At Lockheed Martin, helicopter sales aren't housed in its marquee Aeronautics division, but rather in a special segment designated Rotary and Mission Systems (RMS). The good news for Lockheed Martin investors is that this business is more profitable for Lockheed than BDS currently is for Boeing.

S&P Global data show that RMS earned $1.3 billion in operating profit on $19.7 billion in sales last year, resulting in an operating profit margin of 6.7%. That's still not a great number for Lockheed Martin, which earned operating margins of over 10% for the company as a whole in 2025. Still, Boeing's operating margin in Q1 was only 3.1%, and it was negative last year.

Even better news: In Q1 2026, the profit margin in Lockheed's RMS business expanded to 9.2%.

What this means for investors

RMS may not quite be firing on all cylinders yet. However, it is improving, and a 9.2% profit margin on $3 billion in Sikorsky sales should still generate nearly $277 million in operating profit for Lockheed on its contract.

By comparison, even if Boeing can maintain its current 3.1% margin at BDS, its $1.2 billion Apache parts sale might generate as little as $37 million profit for the company -- just 1.1% of the $3.3 billion operating profit Boeing earned over the last 12 months.

Combine the size of the potential profits from these deals with the fact that Boeing stock costs 90 times trailing earnings today, while Lockheed looks like a relative bargain at just 26 times earnings, and the choice is clear: Lockheed Martin stock is the better buy.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.