All Nippon Airways Co. (ANA) plans to pay no winter bonuses for the first time since 1962, the company told its labor union on Wednesday.
Due to deteriorating earnings, the pandemic-stricken airliner will also reduce monthly salaries for its nonmanagerial employees for the first time in 20 years. These two moves combined will reduce the average annual salary of nonmanagerial employees by more than 30% from the previous year.
After labor-management consultation, the envisaged measures will be incorporated into the company's structural reform plan to be compiled at a later date.
The plan to pay no winter bonuses is the first such move since relevant records became available in 1962, according to the company's proposal to the union. ANA had already halved summer bonuses to the equivalent of one month's pay.
As there is still lingering uncertainty over the future of ANA's business performance, the airline concluded it would also be difficult to pay the winter bonuses.
Monthly salaries for nonmanagerial employees will be reduced for the first time since fiscal 2000. Executive remuneration and monthly salaries for management positions have already been reduced since April, and now with the latest plan, nonmanagerial employees will also be subject to pay cuts. No date is set for the reductions to end.
The measures will cover all of ANA's about 15,000 employees. The latest moves, together with measures introduced earlier to tackle the pandemic-driven situation, will likely reduce costs by over 10 billion yen.
In the future, similar reductions in personnel costs will be proposed for about 65 companies in the ANA Group, covering about 48,000 employees. The company will also review the voluntary retirement program already in place and increase the severance pay for employees who leave through the program. The company will not set a target number of employees for voluntary retirement.
In addition, the airliner will establish a new system that allows employees to take up to two years off without pay to make it easier for them to study abroad or obtain qualifications.
ANA's passenger numbers for the April-August period this year were down by about 82% for domestic flights and by 96% for international flights compared to the same period last year. ANA Holdings Inc., the listed company that owns ANA, posted a net loss of 108.8 billion yen in its consolidated financial results for the April-June period this year.
There is no prospect of improvement in the number of passengers, and the airliner is expected to post a large loss in its interim results to September.
ANA Holdings has a policy to never cut employees for the company's convenience. It hopes to get through the crisis by reducing personnel costs.
Labor unions of the ANA Group companies have agreed with management's proposals to date. The airliner's union and management are also expected to reach a broad agreement on the latest proposal as well, on the condition that jobs are maintained.
In addition to personnel costs, ANA will also reduce the number of planes and review unprofitable routes in a bid to survive.
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