Turkey's relations with the US have been strained

The firm also reported strong quarterly profit and sales growth.

Work on the 117 planes owned by Turkey is expected to start in July and should be finished by 2012. Turkey wants to continue using the planes until 2040.

The agreement may signal an easing of the tensions between Turkey and the US that surfaced over Iraq and were stoked by an official state visit to Syria.

Smoother path

"This agreement is the best proof that our relations are on track," said Turkish Defence Minister Vecdi Gonul.

"We are strategic allies and we are cooperating on many regional issues such as the Balkans, the Caucasus and the Middle East."

Turkey is a member of Nato and is scheduled to start negotiations with the European Union about membership later this year.

Eric Edelman, the US ambassador to Ankara, said the deal was "a great example" of cooperation between the two countries.

Lockheed will be the main contractor, with Turkish firms also doing some of the work.

The company said that first-quarter net income rose 27% to $369m, from $291m a year earlier, driven by sales at its electronic systems and space systems divisions.