Royal Mail reveals £200m cost of strikes as revenue dives

International Distribution Services said 18 days of industrial action by postal workers —  including seven in the run-up to Christmas — cost it around £200 million in the nine months to the end of December. Parcel volumes fell by a fifth, taking revenue from that part of the business down by almost 18% year-on-year. Its overall loss for the period reached £295 million.

For its full financial year, it pointed to an adjusted operating loss “around the mid-point of the existing £350 million to £450 million range” it had already forecast. But that “assumes no further days of strike action in the fourth quarter and the Communication Workers Union (CWU) accept a pay settlement in line with the best and final pay offer.”
A ballot is under way at the CWU for further industrial action, with around 112,000 staff eligible to vote from the company’s staff of almost 160,000.

Royal Mail also said the number of voluntary redundancies needed to reach its targeted cuts for full-time equivalent posts “will be significantly lower” than the 5000 to 6000 expected in an update in October, in part due to staff deciding to leave, or what it called “current levels of attrition”. It repeated its pledge of no compulsory redundancies.

Contingency measures taken during the strikes were “effective” and “robust”, it said. In the peak Christmas post period, despite seven strike days in December, Royal Mail delivered “in excess of 110 million parcels and over 600 million addressed letters”, it said.

Royal Mail also claimed that up to 12,500 union-grade employees covered by the CWU returned to work on strike days. The union objects to working pattern changes proposed by Royal Mail as part of the company’s plans to focus on parcels, which include a move away from the morning delivery of letters.

Dave Ward, the CWU’s general secretary, said recently that the company wants to “abandon the ‘AM’ delivery period, adding: “Once Royal Mail abandons what is currently its ‘sweet spot’, then competitors will move in on that slot. Letters will not disappear.”

The company said today that compared with pre-pandemic levels, addressed letter volumes were down by a quarter “reflecting the fundamental change in volume and revenue mix”, with parcels now accounting for 54% of total revenue from 48% before Covid hit, “highlighting the urgent need to deliver change”.

As well as the industrial action, Royal Mail was hit by a cyber attack during the period and was unable to send parcels overseas for a time. International letter services have resumed, but it is still recommending that people do not post parcels abroad.

It also noted the impact from lower volumes of Covid testing kits going through the post.