Lockheed Martin's (NYSE:LMT) F-16 fighter jet is the most popular fighter jet in the world. It's probably not surprising, then, that it's also the most popular fighter jet in Greece, where the 155 F-16C and -D variant fighters form the backbone of the Greek Air Force.

And as we just found out, the F-16 may keep on flying for Greece for decades to come.

Last week, the U.S. Defense Security Cooperation Agency (DSCA) notified Congress of a plan to upgrade as many as 123 of Greece's F-16s to the most advanced F-16V ("Viper") configuration, equipped with new APG-83 Active Electronically Scanned Array (AESA) radar from Northrop Grumman. Lockheed says the new configuration will offer the Hellenic Air Force "greater situational awareness, flexibility and quicker all-weather targeting," the ability to track "20-plus" targets simultaneously, and perhaps most important, "hardware and software commonality with F-22 and F-35 AESA radars" installed on Lockheed's fifth-generation fighter jets.

F-16 "V" fighter jet

In its V configuration, Lockheed Martin's F-16 can continue to produce profits for its maker. Image source: Lockheed Martin.

Combined with other upgrades and equipment, DSCA values the Greek sale at more than $2.4 billion.

Now, this deal is not yet a done deal. Congress still needs to approve it. But seeing as there has never been an instance in which Congress nixed a foreign arms sales after the DSCA notified it about the sale (never, ever), I'd say this one's chances of going through are pretty good. And when it does go through, Lockheed Martin has been named the principal contractor to perform the sale.

What it means for investors

Two things jump out at me about this F-16 deal: First and foremost, the fact that Greece is upgrading fourth-generation F-16s at all and not trying to buy brand-new fifth-generation F-35 Lightning II stealth fighters. At a cost of just over $19 million per upgraded fighter jet, Greece seems to believe it will get more bang for its buck by upgrading old F-16s than by spending upward of $90 million per plane to buy brand-new F-35s.

Lockheed Martin is probably pleased with those economics too. According to the Fort Worth Star-Telegram -- the F-16's hometown paper -- Lockheed earns superior profit margins on its F-16s relative to the margins it earns on the F-35. As long as that holds true, Lockheed may be happy to collect less revenue from F-16 upgrades but earn higher margins on those upgrades.

This also helps to explain why, at the same time as Lockheed Martin is ramping up production on the F-35, the company is also making moves to continue production of its venerable F-16. Earlier this year, Lockheed announced plans to move its F-16 production line from Fort Worth, Texas, to Greenville, South Carolina, to make room for expanding F-35 production in Fort Worth. Subsequently, there has also been talk about shifting production of the F-16 out of the country -- all the way to India.

As long as superior profit margins are to be had from upgrading existing F-16 fleets in countries such as Greece, I'd say the chances of F-16s and F-35s continuing to fly in tandem -- and to be produced in tandem -- look pretty good. And the prospects for Lockheed Martin continuing to profit from both models of fighter jet?

Those look pretty good as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.