Boeing makes "best and final offer" to union

Members of the International Association of Machinists and Aerospace Workers union (IAM) rally on a highway overpass over ongoing contract negotiations during their lunch break at the Boeing airplane assembly plant in Everett, Washington, August 27, 2008.

NEW YORK (Reuters) - Boeing Co said on Thursday it made its "best and final" contract offer to its largest labor union, including concessions the aerospace manufacturer hopes will help avert a strike.

Hoping to prevent a walkout that could cost Boeing $3 billion a month, the company said its offer would provide an average of $34,000 in additional wages and incentive payments over three years to employees in the International Association of Machinists and Aerospace Workers (IAM).

Boeing had previously offered $28,000.

The company appeared to make other key concessions, said Peter Jacobs, aerospace analyst at Ragen Mackenzie in Seattle.

"From what I can see, it does look like it should have a good chance of satisfying enough of the workers that it decreases the odds of a strike," Jacobs said.

Boeing is offering workers either 6 percent of gross pay over the final 12 months of the existing contract, or $2,500, whichever is greater. It offered a $2,500 ratification bonus if a majority vote approves the contract on or before September 3.

IAM members are due to vote on the contract on September 3, when the current 36-month deal expires. Without a new pact, the union could vote to strike as early as September 4.

The company can avert a strike by getting more than 34 percent of union members to ratify the offer, because a two-thirds majority of "no" votes is needed to start a strike.

Any strike would further delay Boeing's new 787 Dreamliner, a key to the company's financial future.

Boeing withdrew proposals to discontinue medical coverage for early retirees who were hired after January 1, 2010, and to create a defined-contribution retirement plan for those hired after January 1, 2009. It also withdrew its proposal to negotiate a separate contract for workers in Wichita.

The IAM, which represents 27,000 Boeing employees, mostly in the Seattle area, has rejected two proposals. Spokeswoman Connie Kelliher said the IAM was poring over Boeing's final proposal and was not ready to respond.

"We're going over it line by line to catch the details to know exactly what impact it will have on our members," she said. "It's 300 pages, the devil is in the details."

"OUR BEST SHOT"

Boeing made its final offer in time for the U.S. Labor Day weekend to give employees several days to consider it.

Asked what recourse Boeing had if the final offer is not ratified, Doug Kight, Boeing vice president and lead negotiator, said only: "We're focused solely on getting a ratified agreement by September 3rd."

A strike by the IAM could cost Boeing $3 billion a month in lost revenue 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.

During negotiations, Boeing took the unusual step of presenting its proposals directly to workers on its Web site, circumventing the IAM. It has run radio ads in the Seattle area encouraging union members to look closely at the offer.

The IAM has gone on strike against Boeing three times in the last 20 years.

Boeing shares closed up $1.82, or 2.8 percent, at $66.34 on Thursday afternoon. The shares have traded in a 52-week range of $107.15 to $60.77.

(Additional reporting by Nick Zieminski and Scott Malone and Daisuke Wakabayashi)

(Reporting by Mark McSherry; Editing by Steve Orlofsky, Dave Zimmerman, Gary Hill)