Royal Mail asks to cut letter service to just FIVE days a week

2022-11-17

Royal Mail asks to cut letter service to just FIVE days a week after tumbling to a £219million operating loss – and facing ‘intensive’ talks with unions to avert yet more strikes

Royal Mail is seeking to cut letter service to just five days per week
Bosses attributed the request to financial losses worsened by strike action
Half-year results showed Royal Mail tumbled to a £219million operating loss
Royal Mail said it is in ‘intensive’ talks with unions to avert further strike action

Royal Mail has asked the Government for an early move to cut its letter service to five days a week after unveiling an approximately £219million loss bosses say was worsened by strike action.

The postal service is looking to switch from a six-days-a-week letter delivery service to five, covering Monday to Friday only, under its Universal Service agreement.

The group will, however, look to maintain a seven-day parcel delivery service.

The move comes after the firm revealed three days of strike action in the first half of the year cost Royal Mail around £70million. A further five days in October are estimated to have cost about another £30million.

Royal Mail said it is in ‘intensive’ talks with unions to avert further strike action but is making up to 6,000 redundancies amid a swingeing overhaul to turn around its fortunes.

Royal Mail asked the Government for an early move to cut its letter service to five days a week after unveiling an approximately £219million loss bosses say was worsened by strike action

Simon Thompson, chief executive of Royal Mail, vowed to do ‘whatever it takes’ to turn the group around when half-year results showed it tumbled to a £219million underlying operating loss in the 26 weeks to September 25.

The postal service had reported earnings of £235million a year ago.

‘We have always been clear we need change to survive,’ Mr Thompson said today. ‘We have started turning the business around and will do whatever it takes.’

‘We would prefer to reach agreement with the Communication Workers Union (CWU) but in any case we are moving ahead with changes to transform our business.’

A Government spokesman said there are ‘no current plans to change the universal service’.

He added: ‘While we recognise the issues that Royal Mail raise, there would need to be a strong case that showed changes would meet reasonable needs of users of postal services and ensure the financial sustainability of the universal postal service.’

In a statement late on Wednesday, Royal Mail said it had entered ‘intensive talks’ with the CWU ahead of the next wave of strikes planned on November 24.

It expects full-year losses of around £350million to £450million, including the direct impact of 12 strike days – eight that have already taken place and four more that have been announced.

MailOnline approached the CWU for comment.

Royal Mail said it is in ‘intensive’ talks with unions to avert further strike action but is making up to 6,000 redundancies amid a swingeing overhaul to turn around its fortunes. CWU strikers are pictured on September 30 outside a post office in London

The postal service is looking to switch from a six-days-a-week letter delivery service to five, covering Monday to Friday only, under its Universal Service agreement. The group will, however, look to maintain a seven-day parcel delivery service. Pictured: Royal Mail postal workers striking in Huddersfield on October 25

Royal Mail strike action plunges parent International Distributions Services to a loss

International Distributions Services swung to a first-half operating loss of £57million as strike disruption, rising costs and lower delivery volumes took their toll.

At the same point a year ago Royal Mail’s parent company posted an operating profit of £404million.

The former British postal monopoly, which recently changed the name of its holding company from Royal Mail, still expects its full-year adjusted operating loss for Royal Mail, its UK business, to come in around £350million to £450million.

International Distribution Services shares fell today and were down 1.13 per cent or 2.70p to 237.10p this morning, having fallen by nearly 50 per cent in the last year.

IDS forecasts that Royal Mail will return to adjusted operating profit in full year 2024-25. It also maintained its forecast for GLS, its international division.

The group’s revenue for the six-month period ending 25 September fell nearly 4 per cent to £5.84billion, dragged by weak performances at Royal Mail.

Parcel volumes fell by 2 per cent due to ‘unwinding of temporary benefits from Covid-19 lockdown restrictions’ in the prior period and current macro-economic environment, IDS said.

Addressed letter volumes, excluding elections, were down 6 per cent, reflecting a return to the long-term structural rate of decline.

The company said it had accelerated price hikes, upping large-volume business mailing costs by 18 per cent and advertising mail by 5 per cent over the period.

Royal Mail’s owner International Distributions Services (IDS), which was renamed from Royal Mail Group earlier this year and includes international delivery service GLS and Intragroup, reported pre-tax losses of £127million for the first half, against profits of £315million a year ago.

Keith Williams, non-executive chairman of IDS, said: ‘We have started to implement the change needed to rightsize Royal Mail, which will ensure that it is both better placed to serve our customers’ needs in parcels, as well as letters, bring it back to profitability and provide a sustainable future.’

He added: ‘A sustainable future must also include urgent reform of the Universal Service.

‘Government has now been approached to seek an early move to five day letter delivery, whilst we continue to improve parcel services.

‘The board reiterates that in the event of the lack of significant operational change in Royal Mail it will look at all options to preserve value for the group including the possibility of separation of the two businesses.’

Royal Mail last month said it will consult on up to 6,000 redundancies as part of efforts to reduce full-time roles by 10,000, blaming industrial action for mammoth financial losses.

It said it is seeking short-term cost efficiencies through the planned reduction of 5,000 full-time equivalent roles by March and around 10,000 by August.

It has so far focused efforts on the removal of overtime, the decision not to fill empty roles and a reduction in temporary workers, but gave no update on how many roles have gone.

Meantime, dozens of strikes are set to wreak havoc across the UK before Christmas as part of union bosses’ plans to cause maximum disruption.

Nurses, civil servants of all kinds, train and bus drivers, and even Asda workers have either agreed to strike or are considering action.

Rail workers voted to continue taking industrial action in the long-running dispute over jobs, pay and conditions, the RMT announced yesterday.

Union bosses said the decision for yet more action was a ‘fantastic result’ following months of travel chaos across to the UK due to strikes.

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