All Nippon Airways Co. plans to reduce the salaries of all employees next spring by about 5 percent, sources close to the plan said Wednesday.
It would be the first time in Japan's airline industry that base salaries for regular employees have been cut, the sources said.
ANA has already submitted the plan to its labor unions for ground crews and flight attendants and was to present the plan to the union for cockpit crews Wednesday, the sources said.
The labor unions are expected to resist the plan, which calls for revamping the carrier's overall salary structure and raising the performance-based portion of salaries, the sources said.
The plan also envisages cutting the flight allowance for pilots, who earn an average salary of 21 million yen per year, the sources said.
ANA has an annual labor bill of around 180 billion yen. A 5 percent cut translates into a savings of 9 billion yen.
ANA has not increased base salaries over the past two years due to poor earnings.
The SARS outbreak in Asia, which hit earnings this year, came as airlines were recovering from the dropoff in passengers triggered by the terrorist attacks in the United States in September 2001.
The firm has skipped dividend payments for six years through fiscal 2002. In the current fiscal year, the carrier expects to suffer a revenue drop of about 42 billion yen.