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Contract offers 38% pay rise over four years

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Strike halted most jet production, hammered Boeing ( BA )

finances

(Adds union leader quote in paragraph 3)

By Dan Catchpole and Allison Lampert

SEATTLE, Nov 4 (Reuters) - Boeing's ( BA ) U.S. West

Coast factory workers accepted a new contract offer on Monday,

their union said, bringing an end to a bitter seven-week strike

that halted most jet production and deepened a financial crisis

at the troubled planemaker.

The union said members voted 59% in favor of the new contract,

which includes a 38% pay rise spread over four years, easing

pressure on new Boeing ( BA ) CEO Kelly Ortberg after two previous

offers were voted down in recent weeks.

"This is a victory. We can hold our heads high," Jon Holden

the union's lead negotiator, told members after the results were

announced.

The end of the first strike in 16 years by Boeing's ( BA ) largest

union provides welcome relief for a company that has lurched

from one setback to the next since a door panel blew off a

near-new 737 MAX plane in mid-air in January.

Around 33,000 machinists who work on the best-selling 737

MAX jet, as well as the 767 and 777 widebodies, have been on

strike since Sept. 13, demanding a 40% wage increase and the

restoration of a defined-benefit pension lost a decade ago.

It will now take weeks to ramp up plane production and boost

cash flow, with 737 MAX output expected to languish in the

single digits per month for some time, according to two people

briefed on the matter, far short of the 38 a month targeted

before the strike.

Workers can start building planes again from Wednesday and

must be back to work by Nov. 12, the International Association

of Machinists and Aerospace Workers (IAM) said, although Boeing ( BA )

has warned that some people will have to be retrained due to the

prolonged period away from the factory floor.

The strike was costing Boeing ( BA ) around $100 million a day in lost

revenue, analysts said, prompting the planemaker to raise $24

billion from investors last week in a bid to preserve its

investment-grade credit rating.

Ortberg now needs to reset relations with machinists in the

Pacific Northwest who have used the strike to vent anger built

up over a decade when wages have lagged inflation and the cost

of living in the Seattle area has soared.

Boeing ( BA ) has said the average annual machinists' pay at the end of

the new four-year contract will be $119,309, up from $75,608

previously.

The pay increase may add $1.1 billion to Boeing's ( BA ) wage bill

over the four years, while a $12,000 ratification bonus for each

union member could result in another $396 million in outflows,

according to analysts at Jefferies.