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Royal Mail has been on the brink of collapse amid record losses. The company – shedding £1million a day – said if a deal could not be struck with striking unions its duty to deliver to every address in Britain was in peril.
Royal Mail blames the impact of strikes by postmen and women and the continuing decline of its core business for the need to make swingeing cuts. It expects to report an annual operating loss of £350million-plus in days.
The Communication Workers Union, which represents 115,000 postal workers, is poised to announce multiple strike dates next month which could cause huge disruption over Easter.
A formal announcement is expected this week. It said: “It is clear Royal Mail Group is in a serious financial situation. This is as a direct result of mismanagement and recklessness at the most senior level of the company.”
Darren Jones MP, chair of the Commons Business, Energy and Industrial Strategy Select Committee, said: “It would be a scandalous outcome of the privatisation of Royal Mail for the shareholders to keep the international, hugely profitable parcels business they spun out of Royal Mail – alongside the significant pay, bonuses and dividends of the past years – while handing back the letters business to the taxpayer to clear up their mess.”
If Royal Mail, led by Simon Thompson, is placed into administration it could mean the 507-year-old company being declared insolvent.
It would disproportionately affect millions of elderly and vulnerable customers, who are not always tech-savvy and place a premium on its services.
Royal Mail has threatened to separate its domestic and international businesses if “significant operational change” cannot be agreed with unions.
Its latest trading update revealed a £295million loss for the first nine months of the last financial year with two- thirds of that blamed on strikes.
The current pay offer is nine per cent over two years starting next month, including two per cent for 2022/23.
Royal Mail said: “We have highlighted the need for Royal Mail to transform and been very clear about the damage of strike action.”
MPs found Royal Mail had failed to hit first-class delivery targets every year since 2017. Next month the price of a first class stamp will rise above £1.
