US aviation giant, Boeing has indicated that it will set up a unit to build its upgraded 777 twin-aisle jet in the Seattle area if it is able to negotiate a deal with its largest union.

The company wants the union members to accept benefit cuts and a contract extension that might help secure jobs for a longer time. If the Machinists union members agree to the terms of the agreement, it will revive the relationship between the plane-maker and the labour group following years of discontent at Boeing's commercial hub in Washington's Puget Sound region.

Tom Wroblewski, president of the union's District 751, said in a statement that the proposal "means decades of economic activity for the region and will anchor the next generation of wide-body aircraft production right here in its historic birthplace." He also said that the agreement could provide job security to thousands of union workers in the region.

Washington Governor Jay Inslee, who is working to secure the project for the state by proposing a package of tax incentives and transportation infrastructure investments that will provide $8 billion in benefits to the Chicago-based aerospace company till 2040.