"When union negotiators say the two sides were 'miles apart,' they are correct," Alan R. Mulally said in the e-mail released Thursday evening to The Associated Press.

Striking over Boeing's last offer are airplane assembly workers at Boeing Co. commercial airplane plants in the Puget Sound area, Gresham, Ore., and Wichita, Kan. The e-mail, dated Thursday, appeared to have been sent to all Boeing managers at those sites.

"Having barely moved off their original positions, union negotiators were demanding more than one billion dollars more than what was in our best and final offer," Mulally wrote. "Their positions did not reflect the current market for pay and benefits and far exceeded any recent contract settlements in the industry."

The memo did not say what Boeing's three-year contract proposal was worth, and spokesman Charles Bickers said he could not disclose that figure for competitive reasons.

Mulally said the Machinists are "among the best paid in the industry and in our local markets," and that accommodating the union would have "eroded our ability to compete."

"Regardless of what Boeing says to their managers, 86 percent of our members said the company did not come close to meeting our expectations on pension, health care, job security and a number of other issues," the union replied in a statement posted on its Web site. "The fact is their final offer is a smaller economic and benefit package than the 2002 contract."

Workers represented in the talks now receive an average of $59,000 a year. The company said they would have earned about $62,500 a year by the end of Boeing's proposal, excluding overtime and other extra payouts.

No talks have been scheduled in the union's first strike in a decade. Industry observers have said they don't expect a settlement for at least a month.

"Our hope is for a short work stoppage with minimal impact on our communities and our relationships with them," Mulally wrote.

He said while the company offer was "well above market ... we are always willing to discuss reasonable proposals ... which support our mutual goals."

Union leadership had called Boeing's proposal "insulting."

Boeing had to stop making commercial aircraft when the Machinists walked out.

Among the key issues in the final Boeing proposal were pension payments - increased 10 percent, from $60 to $66 per month for each year of service - and changes in health care plans that required more outlay from workers.

Mulally said the union wanted a more than 33 percent increase in the pension multiplier. Bickers said he understood that to mean a monthly total of about $80 per month for each year of service.

Asked to confirm that figure, Mark Blondin, president of Machinists District Lodge 751, said Thursday evening, "If the company wants to bargain, let's do it at the table."

Before the strike, Boeing said a walkout would be devastating and could cause customers to jump to competitors including European archrival Airbus SAS.

"The union's decision is a deep disappointment ... Improved competitiveness is the main reason for our recent sales success and employment increases, and it is the key to winning additional new business and creating jobs and opportunities over the long term," Mulally wrote in the memo.

After the walkout began, some longtime workers said they were hesitant to walk off their jobs in 2002, when the just-expired pact was negotiated. The airline industry was in a deep and scary downturn, and many of their colleagues had been laid off.

But Boeing's fortunes have rebounded. Many of the striking workers say that while they were willing to make concessions in 2002, they're not willing to do so now.

For Machinists in the Northwest, the final offer would have provided lump-sum payouts of $6,000 over two years. That total could have increased to a maximum of $9,000 for employees who chose to roll the money into a retirement plan.

The company also provided a 2.5 percent wage increase in the third year of the pact for those workers. The offer for Kansas workers was lower.