Boeing's largest union said it was preparing to issue a contract proposal on Wednesday, as negotiations ground on ahead of a threatened strike that could cost the company USD$3 billion a month.

"Union negotiators worked late into the night to prepare our counter-offer and will be delivering it to Boeing today," International Association of Machinists (IAM) spokeswoman Connie Kelliher said in a statement.

The union, which represents 27,000 Boeing employees, said an offer from the plane maker on Tuesday featured some "deal breakers." The IAM rejected the company's previous proposal, calling it "insulting."

Boeing's offer on Tuesday included wage increases amounting to 9 percent over three years. The deal also would boost the pension benefit to USD$78 per month for each year of service.

The company said it was awaiting a counter-proposal and that it would put forward its own final offer in time for the US Labor Day holiday weekend.

Boeing spokesman Tim Healy said the company would end negotiations after it makes its last proposal, which could come on Thursday or Friday.

"The final offer is just that," Healy said. "What we've committed is that this is too important to play those kinds of games."

IAM members were set to vote on the contract on September 3, when the current three year deal expires. Without a new pact, the IAM could vote to strike as early as September 4.

Union members held a rally on Wednesday at a Boeing plant in Everett, Washington. At least a thousand workers walked outside at lunch time and chanted "Strike! Strike! Strike!" before returning to work.

The workers carried signs and wore T-shirts with slogans like "I'll strike if I have to" and "Share the profit$."

Boeing has downplayed that threat, saying talks have been productive.

A strike by the IAM could cost the company USD$3 billion a month in lost revenue if plane orders are not filled. Boeing's commercial planes unit took in USD$8.6 billion in revenue last quarter, or about USD$2.9 billion per month.

A strike also could further delay Boeing's new 787 Dreamliner, which is key to the company's financial future.

In this round of negotiations, Boeing has taken the unusual step of presenting its proposals on its web site directly to the workers, a move that circumvents the IAM. Typically, the union would present the offers to its members.

The most serious points of contention include Boeing's proposals to stop offering early-retirement medical coverage for future hires. The company abandoned an earlier effort to put new workers into a defined-contribution retirement plan rather than the traditional Boeing pension fund.

Industry watchers say that, given the company's turbulent history with its workers, a strike is likely. The IAM has gone on strike against Boeing three times in the last 20 years.

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