LETTERS

OF

UNDERSTANDING

LETTER OF UNDERSTANDING NO. 1

SUBJECT: DATA REPORTS TO BE PROVIDED
TO THE UNION

The Company will continue to provide those data reports to the Union which were being provided during the prior bargaining agreement, subject to such revisions in the future as may be made by mutual agreement of the parties.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 2

SUBJECT: FACILITIES MAINTENANCE SUBCONTRACTING

The Company and the Union have undertaken a joint review of subcontracting practices in the Facilities Maintenance and General Construction organizations at the Primary Locations covered by this Agreement. It has been determined that managing the unique subcontracting aspects of those organization, including the cost effectiveness of subcontracting practices, can be improved by regularly reviewing subcontracting decisions, including work packages being subcontracted and let out to bid. Accordingly, the parties agree to develop a process to review subcontracting decisions at each Primary Location in order to determine whether work packages can be completed by hourly Facilities Maintenance and General Construction employees within budgeted costs and schedules. As part of this joint effort, the parties commit to furthering a work environment that creates operational effectiveness, continuous improvement, and competitiveness.

The Company will conduct a quarterly review with the Union to share status on the previous quarter’s activities and to discuss opportunities to improve the joint review process.

In addition, the Company agrees that employees in Facilities Maintenance and General Construction organization as of September 2, 1999, will not be laid off as a direct result of Facilities Maintenance or General Construction subcontracting. This restriction does not apply in the event of a merger, sale, transfer, or other disposition of a plant or facility or operating unit thereof, or to temporary subcontracting necessary because of required equipment overhaul or repair, labor disruptions, or events beyond the control of the Company (acts of God, natural disasters, equipment failure, major accidents, etc.). In lieu of layoff, employees will be retrained and reassigned for available work outside the Facilities Maintenance and General Construction organization.

The Company may continue to subcontract Facilities Maintenance and General Construction work to be performed on Company property by outside workers provided that such work is of a type and character as has been so subcontracted in the past.

Disputes involving alleged violations of this Letter of Understanding shall be subject to the grievance and arbitration procedure provided for in Article 19 of this Agreement.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 3

SUBJECT: UNION INTERVIEW OF NEW EMPLOYEES

It is recognized by the Company that the Union has an interest and responsibility in explaining the function of the Union in a collective bargaining relationship and the advantages of membership in the Union. The Union is also aware and has agreed that solicitation of membership cannot be conducted during working time due to the interference and disruption that could result in working schedules. To accommodate both viewpoints and assure that an ample opportunity exists for the Union to explain their role in the bargaining relationship while preserving minimal interference in the Company's working schedule the following procedure will be utilized:

1. At an appropriate time following the Company interview, all individuals employed into the IAM bargaining unit will be directed to an IAM&AW representative who is present in the Employment Office.

2. The following message will be used by the Company representative to introduce the IAM&AW representative:

"The Union representative wishes to explain their designation as your bargaining agent, your opportunity for membership, and the payroll deduction of dues for members."

3. The Union representative will advise the employees that membership in the IAM&AW is voluntary and not a required condition of employment.

4. Both the Company and the Union agree to cooperate in the implementation and administration of this procedure. Neither party will interfere, restrain or coerce employees and both parties agree to use good judgment in all words and actions during this procedure.

5. The Union agrees to minimal interference with the new employee employment processing and the Company agrees to refrain from any actions or statements which could adversely reflect upon the Union.

6. The Union agrees to pay their representative's time allotted by this procedure and to have sufficient representatives present during normal working hours.

7. With the implementation of the procedure for the interview of new employees it is agreed that any existing or contemplated arrangements for permitting the Union to explain membership to applicants or hires is no longer valid and will be cancelled.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 4

SUBJECT: EMPLOYEES ON OVERSEAS ASSIGNMENT

Employees on overseas assignment who perform production work will continue to accumulate seniority during such period of assignment without regard to their payroll classification while on such assignment. If such an employee, at the time of such assignment, had on file with the Company an effective authorization for Union dues deduction, the Company will continue to make such Union dues deductions during such period, and the Union agrees to save the Company harmless from any claim for damages on the part of any employee so affected.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 5

SUBJECT: ESTABLISHMENT OF JOBS TO COVER NEW,
SUBSTANTIALLY CHANGED, OR COMBINED WORK FUNCTIONS

The purpose of this Letter is to set forth the procedure to be followed when the Company determines it is necessary to combine jobs or establish a job or jobs to describe new or substantially changed work functions in accordance with the provisions of Article 13 of the Collective Bargaining Agreement of this date.

1. Company representatives identified with the appropriate unit (as defined in Section 1.1 of the Agreement) will prepare job descriptions and discuss such descriptions with Union representatives of the appropriate unit as provided in Section 13.5. In the event it is necessary to assign employees to the new or substantially changed work functions prior to the establishment of the job or jobs, Section 13.6 will apply.

2. The Company's Corporate Vice President, Compensation will transmit a draft copy of the proposed job or jobs to the Union representative designated by the International Association of Machinists and Aerospace Workers, AFL-CIO, to receive such information.

3. Following transmittal of the proposed job or jobs to the designated Union representative, the job or jobs will be established by written notification from a Company representative to a Union representative identified with the unit where the job or jobs are to be established.

4. Union inquiries or grievances as provided for in Article 13 will be received and processed by Company and Union representatives identified with the particular collective bargaining unit defined in Section 1.1 of the Agreement in which the job or jobs have been established.

5. The Company agrees to train affected employees to perform any newly defined tasks when it is determined training is needed. Preference will be given to senior employees when possible.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 6

SUBJECT: NEGOTIATED JOB TITLE CHANGES

Following are provisions mutually agreed to by the Company and the Union with respect to employees affected by negotiated job title changes:

A. *An employee's retention and Category A status will be applicable to the new classification if:

1. There is a change in job code number or title change only, or

2. A job title is deleted or depopulated and employees are reclassified to a newly established job title.

3. The job title is upgraded and combined with an existing job title.

4. The job title is deleted or depopulated and employees are reclassified laterally to an existing job title for the purpose of combination of said job titles.

B. An employee's retention status will be applicable to the new classification if a job title is retained and some employees are reclassified to a newly established job title.

Reclassifications made in accordance with the foregoing will not be subject to other Bargaining Agreement provisions relating to reclassifications.

*If a job title is deleted or depopulated and employees are reclassified to more than one (1) new classification in different labor grades, Category A rights will apply to the job title in the lower labor grade.

Dated September 29, 2005

LETTER OF UNDERSTANDING NO. 7

SUBJECT: JOINT COMPANY-UNION ALCOHOL AND
DRUG DEPENDENCY PROGRAM

The Company and the Union establish the following Joint Company-Union Alcohol and Drug Dependency Program:

A. The following are basic essentials for an effective alcohol and drug dependency program:

1. Participation in the Program by an individual employee must be voluntary and will be kept confidential to preserve the employee's privacy.

2. Effectiveness of the Program is directly dependent upon the degree to which the employee affirmatively seeks such voluntary participation.

3. The Program is by its nature a progressive undertaking, and failure of an employee to participate in an earlier stage may eliminate the employee from subsequent stages.

4. The Company's right to discipline an employee for unsatisfactory performance or attendance is not diminished or modified in any way by the fact that the employee may have an alcohol or drug problem. However, while discipline for other Company Rule violations shall not be affected by this Program, disciplinary action for unsatisfactory performance or attendance may be held in abeyance during the employee's cooperative participation in the Program, provided no further performance or attendance problems occur.

B. The Program is divided into the following stages:

1. Identification.

2. Evaluation.

3. Treatment.

4. Return to work.

C. Identification.

1. Identification of an employee as having an alcohol or drug problem which interferes with job performance or attendance can occur in several ways:

a. The individual employee acknowledges the problem and so advises a Company or Union representative.

b. Company management or Union representatives become aware of the employee's performance or attendance problems and have some reason to believe the problems are alcohol or drug related.

2. At this stage, a brief counseling session attended by the employee, his/her supervisor and, if agreeable to the employee, his/her personnel representative and Union representative, should be arranged and the following items covered: (If the employee so desires, a separate, private counseling session with his/her Union representative can be utilized as an alternative to the Union representative's participation in the supervisor's counseling session with the employee.)

a. The Program shall be clearly explained to the employee.

b. The facts that participation is purely voluntary and will be kept confidential should be emphasized.

c. It should be stressed that the extent of the employee's alcohol or drug problem, if any, has not yet been determined.

d. The employee should be advised that normal disciplinary action appropriate for his/her job performance or attendance problems may be held in abeyance so long as he/she cooperatively participates in the Program, provided no further performance or attendance problems occur.

e. The session will conclude by advising the employee that, if agreeable, an appointment will be arranged with the Company Medical Department for a medical evaluation of the problem.

D. Evaluation.

1. Because alcohol and drug problems vary considerably (their causes are innumerable, they may be temporary or of long duration, they may be acute or chronic, they may or may not involve serious physical deterioration), it is imperative that the scope of the employee's problem must be medically evaluated at the outset.

2. At the appointment with the Company Medical Department, the employee will be advised that:

a. Evaluation of his/her alcohol or drug problem can be conducted by his/her selection of one of the following:

(i) Company Medical Department.

(ii) Any one of a list of outside community resource organizations mutually agreed upon by the Company and the Union.

(iii) His/her personal selection of a medical expert in the field who is satisfactory to the Company and the Union.

b. The results of the evaluation will become part of the employee's Company medical record and will be provided to the employee and, if agreeable to him/her, to the Union.

c. If the evaluation concludes that the employee does not have a significant alcohol or drug problem requiring further treatment, no further participation in the Program is required.

d. If the evaluation concludes that the employee has an alcohol or drug problem requiring treatment, such treatment by an outside organization or medical expert from a list agreed upon by the Company and the Union will be arranged by the Company Medical Department.

e. The employee's participation in such treatment is voluntary. However, if the employee refuses such treatment, or fails to cooperate in its successful completion, any disciplinary action for his/her job performance or attendance problems which has been held in abeyance may be taken.

E. Treatment.

1. When the Evaluation Report indicates that treatment is necessary and the employee agrees in writing to participate, the Company's Medical Department will:

a. Arrange with the employee and the selected treatment agency a schedule for treatment; and

b. If necessary for treatment, arrange with the employee's Company organization a leave of absence under Subparagraph 15.1(a)(1) for the period of the treatment.

2. If the employee continues to work during treatment, he/she will be subject to normal rules of conduct and performance.

F. Return to Work.

1. If a leave of absence is required for the treatment of the employee's alcohol or drug related condition, the employee's return to work must be approved by the Company Medical Department.

2. Such approval will depend, in large measure but not exclusively, on the recommendation of the outside treatment agency or expert as to the employee's successful completion of the treatment.

3. An employee's failure to successfully complete the recommended course of treatment may result in termination of employment unless, in the opinion of the Company Medical Department, the employee is able to return to work.

G. Costs incurred by the employee for medical evaluation and treatment will be reimbursed under the Company's Group Insurance Program subject to the requirements and limitations of that Program.

H. The Company and the Union are interested in exploring the desirability of organizing a Boeing Chapter of Alcoholics Anonymous comprised of eligible hourly employees who could provide counseling and other essential supporting services to employees participating in this Program.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 8

SUBJECT: AOG ASSIGNMENTS

Boeing Commercial Airplane Group employees on emergency field assignments relating to airplane on ground (AOG) involving overnight travel from their home location to a location where the Company has not established an operation, and when such travel is covered by the Company's Business Travel procedures, shall not be subject to the provisions of Sections 5.3, 6.9 and 6.10 of the Agreement.

The employee's work schedule status will be as follows:

(1) No shift identification will be assigned.

(2) The work week will be from 1:00 a.m. Monday to 1:00 a.m. the following Monday.

(3) Monday through Friday will be designated as regular workdays.

(4) Saturday will be designated as the first day of rest and Sunday will be designated as the second day of rest.

Wage payment basis will be as follows:

(1) The employee shall receive at least eight (8) hours pay at Labor Grade 8 for each regular workday on which the employee works or is available for work.

(2) The employee's regular rate shall include his or her base rate plus the applicable Cost of Living rate and the non-regular workweek premium rate of 75¢ per hour.

(3) For the first eight (8) hours worked on other than a day of rest, the employee shall be paid at his or her regular rate.

(4) For time worked in excess of eight (8) hours on other than a day of rest, the employee shall be paid at his or her regular rate for one and one-half times the hours worked through the first two (2) hours and double the hours continuously worked thereafter.

(5) For time worked on the first day of rest the employee shall be paid at his or her regular rate for one and one-half times the hours worked through the first eight (8) hours of work and twice the hours continuously worked thereafter.

(6) For time worked on the second day of rest the employee shall be paid at his or her regular rate for twice the hours continuously worked.

(7) For Company holidays which occur during a travel assignment employees shall receive eight (8) hours' holiday pay, and in addition, for time worked on a holiday, the employee shall be paid at his or her regular rate for twice the hours worked.

The following telephone and laundry allowance will be authorized:

(1) An employee will be authorized to telephone his or her home at Company expense in accordance with applicable Company policy. Where available, the Company's BTN system will be used. When necessary to use conventional long-distance service, the employee will be reimbursed for the cost of the call, provided the call is of reasonable duration.

(2) An employee on a travel assignment will be reimbursed for the cost of any laundry service which is reasonable and necessary in accordance with applicable Company policy.

The Union may designate, from among the employees on an assignment covered by this Letter of Understanding, one (1) employee as a steward; however, the provisions of Article 4 of the Agreement shall not apply to such steward. The Union shall notify the Company in writing of such designation.

Employees returning from such a travel assignment will be allowed twelve (12) hours between time of arrival at the home terminal, or clearance from U. S. Customs in the case of employees returning from international locations, and the start of their next regular shift assignment. Employees will be granted leave with pay for any unworked portion of their assigned shift which falls within this twelve (12)-hour period provided they report for work at the applicable time so described in this provision. Exception to the above provision will be in the case where the twelve (12)-hour period extends beyond the end of the employee's regularly scheduled lunch period, in which case the employee will not be required to report for work and will be paid for the entire shift.

Employees on intercontinental travel assignments for which time enroute exceeds twelve (12) continuous hours will not be required to work their regular shift on the date of departure and will receive a minimum of eight (8) hours pay for that day. When travel time enroute to a customer work location exceeds twelve (12) continuous hours, a minimum of twelve (12) hours rest will be provided prior to beginning work whenever possible within customer required schedules.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 9

SUBJECT: CORPORATE JOBS

The Company shall establish and maintain Corporate job codes for all job classifications covered by the parties' Collective Bargaining Agreement of this date. The Corporate job codes shall be used in the Seattle-Renton, Wichita and Portland Units represented by the IAM. A Job List - Existing Jobs will be prepared, effective September 2, 2005 showing the Corporate job code and title for each job classification and will indicate the jobs that are authorized as of that date for use in each of the respective units.

The Job List will also show the corresponding Wichita code for each job authorized as of that date for use in that unit. The Wichita job code will be used for all employee transactions, records, and reports in that unit. The Corporate job code will be shown in the upper right hand area of Wichita job descriptions and the corresponding Wichita job code will be shown in the lower right hand area of Wichita job descriptions.

It is understood that, as a result of the Company's sole right to organize work and determine job duties, work may be organized so that between units similar work functions and activities will be designated by different titles and descriptions.

It is also understood that the Company in organizing a new work activity, may install in a particular unit those Corporate jobs, authorized for another unit, that describe the work to be performed.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 10

SUBJECT: CORPORATE JOBS COMMITTEE

The purpose of this Letter is to define the objectives of the joint Union/Company Corporate Jobs Committee.

1. The Corporate Jobs Committee shall consist of not more than six (6) representatives appointed in writing by the Union's Corporate Coordinator and not more than six (6) representatives appointed in writing by the Company's Vice President of Union Relations. This Committee may be comprised of representatives from the Puget Sound, Wichita, and Portland Primary Locations. The Union and the Company will each appoint a chair of its group. Recognizing that recommendations by the Committee can have a significant impact on the job classification structure throughout all Primary Locations, it is expected that appointed members of the Committee are to participate fully in all Committee activities as defined by the respective chairs.

2. The Committee shall, as determined jointly by its chairs, study the job classification system established by Article 13 of the parties' Collective Bargaining Agreement in order to maintain the integrity of the system and to develop and implement plans for change that will provide job enhancement, employment security and productivity improvements. Such activities may include but are not limited to:

· Developing innovative job structure proposals.

· Deactivating zero or minimally populated jobs.

· Combining jobs by placing similar work in similar job classifications.

· Developing new jobs and revisions to existing jobs to accurately reflect organization of tasks.

· Establishing like classifications and titles for all locations covered by the Agreement where work responsibilities are the same.

3. If a Committee member is required to visit a Primary Location to fulfill a Corporate Jobs Committee commitment, the appropriate Committee members shall be notified and participate as appropriate in any business involving that visit.

4. The Committee shall report to the Union and the Company on the job classification system, together with the suggestions of the Committee members for changes thereto. The results of the Committee's work will be available to the Union and the Company to facilitate future negotiations.

5. The chairs may, from time to time, jointly recommend the adoption by the Union and the Company of changes in the job classification system. Such recommendations, however, shall be wholly advisory and shall not reopen the Collective Bargaining Agreement or affect Article 2 thereof.

6. To create a proper environment for the Committee's work, the Committee's proceedings shall not be used as the basis for, nor as evidence in, any proceedings under Article 19 of the parties' Collective Bargaining Agreement.

7. The Committee shall function through the life of the Bargaining Agreement.

8. The Union and the Company chairs will establish the Committee meeting locations, schedules, and procedures. The Union and the Company shall bear the expenses of their respective Committee members and shall share equally in all other costs incurred by the Committee.

Dated: September 29, 2005

LETTER OF UNDERSTANDING NO. 11

SUBJECT: OVERTIME

It is understood that the authority of the Company to require overtime work, established by Section 6.10 of the Collective Bargain