Boeing, union "tense" contract talks grind on

CHICAGO (Reuters) - Boeing Co's (BA.N) largest labor union said contract talks remained "tense" on Monday as the workers awaited a new proposal from the company, which hopes to avoid a crippling strike that could cost it $3 billion a month.

"We're still waiting to see an offer back from Boeing to counter the offer we made on Saturday," said Connie Kelliher, a spokeswoman for the International Association of Machinists (IAM), which represents 27,000 Boeing employees, mostly in the Seattle area.

"The company needs to get serious and offer a proposal that gives our members the improvements that they deserve," she said.

Boeing downplayed the angry talk from the IAM, saying talks have been productive.

"Discussions have been good," said Tim Healy. "We still remain optimistic that we can give a final offer by the Labor Day weekend."

Healy also dismissed predictions from industry watchers who expect the IAM to go on strike against Boeing when the current 36-month labor agreement expires at midnight on September 3. A strike could begin on September 4 if IAM members approve it.

"Sometimes I get the impression that analysts are predicting a strike because they're hearing a lot of the rhetoric out there," Healy said.

Boeing is expected to propose its best and final offer around Labor Day, September 1, with IAM members set to vote on the contract on September 3.

The most serious points of contention include Boeing's proposals to stop offering early-retirement medical coverage for future hires. A second sticking point is Boeing's proposal to put new workers into a defined retirement benefit plan rather than the traditional Boeing pension fund.

Boeing and the IAM resumed talks on Monday, a day after the union called the company's most recent proposal "insulting." The plane maker offered a pay increase of 2.5 percent the first year and 2 percent in each of the following two years.

The IAM said it submitted a counter-proposal that includes a substantial increase to the pension and improvements in health-care coverage.

A strike could cost Boeing $3 billion a month in revenue, as it would not get paid if plane orders are not filled. Boeing's commercial airplanes unit took in $8.6 billion in revenue last quarter, or about $2.9 billion per month.

Industry watchers say a strike is likely, given the fractious history of Boeing and its workers. The IAM has gone on strike against Boeing three times in the last 20 years.

Its members walked off the job for 48 days in 1989; for 69 days in 1995; and 28 days in 2005. The union rejected Boeing's final offer in 2002, but less than the necessary two-thirds voted for a strike, which meant the contract was accepted by default.

(Editing by Gary Hill)