MONTREAL, June 20 (Reuters) - Bombardier Inc has offered its workers on a key jet program a new and final contract that would deliver pay hikes of up to 18.5% over five years, according to a letter from their union seen by Reuters.
Workers are set to vote on the contract on Wednesday and rejection would "automatically lead to an unlimited general strike," according to the letter sent to members on Monday.
The Canadian business jet maker on Friday presented a final offer to the union representing workers on its Challenger program, which accounted for just over a third of the company's plane deliveries in 2021.
Companies from Bombardier to some European airlines are seeing wage disputes with workers as inflation rises, which is expected to increase cost pressure as demand for travel soars.
Business jet companies are filling up order books on higher demand from wealthy travelers to fly private due to COVID-19, but a recent market sell-off and recession fears have raised questions over the long-term strength of the market.
Salary increases and pension are key issues in the talks for the estimated 1,800 workers who walked off the job for a day last week after rejecting an earlier offer.
The new contract would give workers an additional 12.5% in the first three years, retroactive to December 4, 2021, plus 0.5% above cost of living in the final two years, up to a maximum of 3%, the letter said.
The union, the International Association of Machinists and Aerospace Workers (IAMAW), initially asked for higher wage increases in the last two years of the contract.
A union spokesman declined comment while Bombardier declined to discuss details of the new offer.
Predicting the path of inflation has proven difficult in the aftermath of the pandemic, though the Bank of Canada foresees a return to the 2% target by 2024. Analysts surveyed by Reuters expect inflation to hit 7.4% in May, which would be the highest since February 1983.
The data will be released on Wednesday.
(Reporting By Allison Lampert in Montreal and Julie Gordon in Ottawa; editing by Diane Craft)