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Boeing and union reach deal to end strike; shares jump

NEW YORK (Reuters) - Boeing Co and its biggest union have agreed to a tentative deal to end the longest strike at the planemaker’s plants in 13 years and halt revenue losses estimated at $100 million a day.

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. REUTERS/Marcus Donner

If the deal, backed by union leaders, is approved by members in a vote on Saturday, it will bring the 53-day strike to an end and reopen Boeing’s Seattle-area factories that have been closed since September 6.

Boeing shares jumped 15 percent, followed by some of its key suppliers, but are still down 45 percent this year.

The agreement, struck late on Monday after five days of talks with a federal mediator, hands Boeing’s 27,000 assembly workers a 15 percent pay raise over the four-year life of the contract and gives the union more scope for challenging Boeing’s use of outside contractors.

The International Association of Machinists and Aerospace Workers, or IAM, had initially wanted a 13 percent pay raise over three years and to rewrite certain language in the contract relating to outsourcing.

Both sides claimed victory.

“We won the battle and made some significant gains” on job security, said IAM, while Boeing said it had “retained the flexibility necessary” to manage its business.

Outsourcing has become the largest sticking point between the planemaker and its plant workers in the last few years, as Boeing has sent most of the production work on its new 787 Dreamliner overseas, and is focusing on assembling the plane at its largest Seattle-area factory.

If members of the IAM ratify the deal and return to work from Monday it will end the longest Boeing strike in more than a decade. The union walked out for 28 days in 2005 and 69 days in 1995.

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RELIEF

News of the breakthrough came as a relief to aerospace companies worldwide, part of an increasingly globalized network of suppliers.

Shares of Spirit AeroSystems Holdings Inc, a former unit of Boeing that makes fuselage and wing parts chiefly for its former parent, rose 6 percent.

Carbon-composite provider Hexcel Corp was up 19 percent and titanium producer RTI International Metals Inc, whose products are key to Boeing’s modern planes, rose 29 percent.

Rivet maker Precision Castparts Corp, and aerospace component companies Rockwell Collins Inc and Goodrich Corp all rose more than 10 percent.

European aerospace stocks mainly outperformed a market rally that began in Asia following weeks of pressure from the financial crisis. Shares of one of Boeing’s French suppliers, cabin door maker Latecoere, soared 12 percent.

DEAL NEEDED

Both Boeing and the machinists union had shown recent signs of wanting an end to the strike. Wall Street analysts estimated Boeing was losing $100 million in revenue for every day its plants were closed, while striking workers lost their usual health-care benefits after one month on strike and were receiving a meager $150 per week strike pay from the union.

If approved, the deal would end a saga of failed negotiations and public bickering. IAM members rejected Boeing’s initial contract offer on September 3 and walked off the job on September 6, after 48 extra hours of emergency negotiations came to nothing. The two sides went back to the bargaining table briefly in mid-October without success. The most recent negotiations started on Thursday.

Boeing now faces contract talks with the Society of Professional Engineering Employees in Aerospace, which represents more than 20,000 white-collar engineering workers. SPEEA said on its Website that negotiations would start on Wednesday.

Boeing shares closed up 15.5 percent at $48.91 on the New York Stock Exchange. At Monday’s close, the stock had fallen 52 percent so far this year, hurt by the broad decline in the market and worries about declining orders and delays on its key 787 Dreamliner. It hit a 4-1/2 year low of $39.99 two weeks ago.

Additional reporting by Laura Myers in Seattle and Tim Hepher in Paris; Editing by Lisa Von Ahn and Maureen Bavdek

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