China's first aircraft carrier, the Liaoning (PLAN CV-16). Source: Google Earth.

All of a sudden, aircraft carriers are back in fashion.

Over in Russia, they're drawing up plans to build the world's biggest aircraft carrier, a 100,000-ton beast that can carry 100 combat aircraft. China's building one, two, or maybe even four aircraft carriers. And here in the United States, we're busy building our second ­Ford-class supercarrier.

Around the world and across the seas, aircraft carriers are popping up in the unlikeliest of places -- in Korea, in Thailand, in India, Japan, and maybe soon in Singapore, as well. But you'll never guess the latest country to announce plans to acquire one.

One day soon, the Turkish Navy could boast a light aircraft carrier like this Juan Carlos I-class Spanish Landing Helicopter Dock. Photo source: Wikimedia Commons.

Introducing the Ottoman (Naval) Empire
I won't keep you in suspense: It's Turkey. As reported earlier this month on, the Turkish government has just signed a near $1 billion deal to cooperate with Spanish shipbuilder Navantia to build a Juan Carlos I-class light aircraft carrier. Here's what we know about it.

Stretching 758 feet in length, and weighing 26,000 tons, the Juan Carlos is the largest naval warship ever built in Spain. Once Turkey gets its copy, it will outweigh the next-largest Turkish warship by a whopping seven times. Described in the press as an "LPD" -- a landing platform dock similar to the U.S. San Antonio-class warships... 

USS San Antonio (LPD 17). Photo source: U.S. Navy.

...the Juan Carlos actually more closely resembles a landing helicopter dock (LHD -- its official designation within the Spanish Navy), or a landing helicopter assault, or LHA, warship like our own America class:

America's mini-aircraft carrier, the USS America (LHA-6). Photo source: U.S. Navy.

Put more simply, it's an aircraft carrier.

What Turkey will get
According to published reports, upon delivery in 2021,Turkey's new aircraft carrier will be capable of carrying:

  • a dozen attack helicopters, such as the United Technologies (NYSE:RTX) Black Hawk helicopters and Textron (NYSE:TXT) Cobras currently in Turkey's arsenal
  • another dozen F-35B short takeoff/vertical landing (STOVL) stealth fighter jets (such as Turkey is building in cooperation with Lockheed Martin (NYSE:LMT)
  • 46 of Turkey's German-built Leopard 2 main battle tanks 
  • a handful of beach landing craft
  • as many as 1,200 combat infantry or marines -- one full battalion.

That's a lot of firepower.

Why Turkey wants it
Over the years, Turkey has had trouble with a variety of nearby nations -- Cyprus, Greece, Israel, and Syria, to name just a few. More recently, NATO-member Turkey may have been spooked by Russia's invasion of Crimea, just across the sea to the north.

What it means to investors
In recent years, there's been a fierce debate raging in and around the U.S. Pentagon about the future of the aircraft carrier -- how many we can afford to build, and whether we should be building them at all. One thing is clear, though: As the U.S. carries on its debate, the rest of the world is going ahead and buying aircraft carriers. So what does this mean for investors?

Ideally, it would mean that these other countries would buy their aircraft carriers from Huntington Ingalls (NYSE:HII) -- which is the defense contractor that builds America's carriers. Unfortunately, most of the carrier construction contracts we've seen awarded in recent years have gone from foreign countries to foreign builders. No joy there for U.S. defense contractors.

One angle that investors should keep in mind, though, is that the majority of the new carriers that have been announced are of the "light" variety. These small carriers are limited in the aircraft that they can carry, and in particular, are usually limited to carrying only helicopters, or STOVL fighter jets such as the New Lockheed Martin F-35B. It's here, I would submit, that we find opportunity.

Because Lockheed makes the world's only fifth-generation stealth fighter jet that can also take off and land from the flight deck of a mini-aircraft carrier, it basically has a lock on this market -- a market that, as I've described above, is growing rapidly. According to Lockheed Martin, a single F-35B currently costs $104 million. That means that aboard Turkey's new aircraft carrier, for example, a full load of 12 F-35Bs would probably cost $1.25 billion -- 25% more than the aircraft carrier itself!

What's more, as the market for small aircraft carriers grows the market for F-35Bs, it will permit Lockheed to sell more fighter jets, spread out R&D costs among the greater number of units sold, lower prices, and sell more fighter jets to buyers attracted by the lower prices. For this reason alone, U.S. defense investors should applaud the building of more aircraft carriers by U.S. allies like Turkey.

Lockheed Martin flying over the American LHD USS Wasp (LHD 1). Photo source: Lockheed Martin.