Home / Royal Mail / How Royal Mail’s letters crisis left it vulnerable to the Czech Sphinx

How Royal Mail’s letters crisis left it vulnerable to the Czech Sphinx

Costs have not fallen alongside the lower volumes. Royal Mail has blamed the restrictive framework for its hefty losses of £319m in the first half of the year, as well as for a slump in service quality that sparked a record £5.6m fine from Ofcom.

Earlier this month, Royal Mail put forward proposals to deliver second class letters three times a week, while maintaining a six-day service for first class service. It also wants to water down quality of service targets.

The company has said the changes could save it £300m a year. Ofcom is now reviewing the plans, though any reform could ultimately come down to a vote by MPs and political opposition is already rife.

Issues have been compounded by lengthy strikes by postal workers that cost the company £1m per day at their peak.

Martin Seidenberg, chief executive of parent company International Distributions Services (IDS), is refocusing Royal Mail on parcel deliveries and has outlined new measures to boost productivity.

Earlier in April he appointed Emma Gilthorpe, a former Heathrow executive, as the new chief executive of Royal Mail. She is the company’s fourth boss in five years, and will be tasked with restoring order to the troubled postal service.

Yet Kretinsky’s surprise bid threatens to derail Gilthope’s plans before she has even taken up her post.

In a statement on April 17, Kretinsky’s EP Group, which is already IDS’s largest shareholder with a 27.5pc stake, took aim at the company’s woes.

It said: “Weak financial performance, poor service delivery and a slow transformation, in the face of a market going through structural change, have put the business under unsustainable pressure.

“With the increasing competition from multinational companies in the UK postal market, private investment in Royal Mail becomes crucial.”

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