Aug. 29 (Bloomberg) -- Boeing Co.'s largest union plans to give members a recommendation today on whether to accept the planemaker's contract offer next week or hold out for a bigger share of its record profits and go on strike.

Boeing presented the International Association of Machinists and Aerospace Workers with a final offer yesterday that would increase base pay by 11 percent over three years. Workers also would get a $2,500 payment if they approve the proposal by Sept. 3, plus other bonuses. The plan would preserve the way Chicago-based Boeing uses contractors, rejecting changes the IAM sought and has said it would be willing to strike over.

``It's 300 pages and we're going over it line by line,'' IAM spokeswoman Connie Kelliher said last night near Seattle, where the talks were held. ``It's too important to people's lives to miss even one line that might change something.''

Boeing is giving the union's 27,000 machinists in Washington state, Oregon and Kansas six days to study the terms, and the union said on its Web site it plans to make a recommendation by the end of today. If more than two-thirds reject the deal, the workers will walk out Sept. 4, shutting the Seattle manufacturing hub for the world's No. 2 commercial-plane maker and potentially further delaying the new 787 Dreamliner. A stoppage may cost Boeing $120 million a day in lost revenue, Jefferies & Co. analyst Howard Rubel estimates.

Boeing fell 7 cents to $66.27 at 9:48 a.m. in New York Stock Exchange trading. The stock price has declined 35 percent since October, when the first of three Dreamliner delays was announced because of parts shortages and problems with suppliers.

Terms of Offer

The groups exchanged initial plans in May and have been ensconced in a Seattle-area hotel in final talks since Aug. 21.

``This offer represents the best package of pay and benefits in the aerospace industry,'' Doug Kight, Boeing's lead negotiator, said yesterday. Chief Executive Officer Jim McNerney signed off on the proposal and it won't be changed regardless of what the IAM recommends to employees, Kight said.

The final proposal provides raises of 5 percent the first year and 3 percent the following two years. The combined 11 percent raise would be the biggest since the one of the same amount in 1999. The union was seeking an increase at the top end of the 9 percent to 13 percent three-year range it's won recently for other aerospace companies, including Textron Inc.'s Cessna unit a year ago.

Terms also include a 14 percent boost in pension payments; additional cost-of-living raises each year; a bonus of 6 percent of gross wages or $2,500, whichever is greater; and the extra $2,500 if the deal is accepted in a first vote that takes place on or before Sept. 3.

Watching `the Other Hand'

``We knew they were going to throw some bonus figures at us that might look tempting,'' said Kelly Kristjanson, a quality inspector at Boeing's Everett, Washington, plant, where twin- aisle planes including the 747 are built. ``It's where they are going with the other hand that we have learned to be cautious about.'' He said the wage increase doesn't reflect what workers deserve given Boeing's record order backlog and that he'll hold out for a 13 percent raise.

The total average annual value of the contract would be $110,400, 23 percent greater than the typical machinist's average compensation now, including overtime, bonuses and benefits, Boeing spokesman Tim Healy said. The average machinist's wage is about $26 an hour now, or about $54,000 a year.

Kight called the package ``the best contract offer in America this year.''

Boeing dropped most plans the union had termed ``strike issues,'' including proposals to negotiate a separate contract for the 700 machinists in Wichita, Kansas; to give new workers a 401(k)-style retirement plan instead of the traditional defined- benefit pension; and to cut medical coverage for early retirees.

Order Backlog

Boeing, which still needs to make about 160 planes by year- end to meet its aircraft-deliveries goal, has a record order backlog of $275 billion that would take machinists eight years to build. Still, the company has said it needs to make sure any contract improvements are sustainable. Some airlines have canceled or deferred deliveries because of record oil prices.

``The backlog at Boeing is huge and the IAM seems to know they have a winning hand,'' JB Groh, an analyst at DA Davidson & Co. in Lake Oswego, Oregon, said last night.

The union says workers deserve more of Boeing's record profits since the last contract was signed in 2005, along with more job security. Machinists have gone on strike over three of the last six contract negotiations. The most recent walkout shaved $300 million from second-half earnings in 2005.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net

Last Updated: August 29, 2008 09:49 EDT