All Nippon Airways Co. is considering slashing its retirement and pension benefits by around 10 percent from the new business year that begins April 1, company sources said Sunday.
The company expects the measure would lead to the reduction of about 5 billion yen in personnel costs annually, they said.
The move is aimed at maintaining ANA's position as the country's major flight operator amid sluggish earnings due to increasing fare competition.
The airline has already proposed the plan to its labor unions, securing agreement from the 9,000-member ANA Workers Union organized by ground staff and flight attendants, the sources said. Negotiations with the 1,500-member All Nippon Airways Crew Association organized by pilots and other flight crew are still under way.
ANA expects to cut a fund shortage in the firm's retirement and pension program by about 45 billion yen, according to the sources.
Currently, 80 percent of ANA's retirement and pension budget goes to lump-sum retirement payments, with the remaining 20 percent going toward pension benefits for retired employees.
Under the latest plan, the airline will reduce the ratio of the lump-sum payments to 60 percent and manage 10 percent of total payments under a 401(k)-style defined-contribution pension plan, whose returns vary according to how employees invest contributions.
ANA will also place more emphasis on employee performance in calculating the amount of lump-sum retirement packages, which have thus far been determined on the basis of employees' wages and length of service, they said.
Employees joining the company in fiscal 2003 will see a full 10 percent drop in retirement payments, while existing employees will see milder cuts, they added.