Royal Mail Threatens To Declare Business Insolvent

The talks between the Communications Workers Union and Royal Mail apparently have entered into a new category, with the company saying they are ready to put the company into a form of government-handled administration.

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Placing the UK’s postal service into a government-handled administration is equivalent to putting the company into bankruptcy here in the United States.

There had been some peace between the two sides since December as they tried to haggle out a deal. The union had not called for strikes, as they were trying to resolve their labor disagreement during a time when typically such disagreements would be settled.

However, it now appears the situation has turned for the worse as the two sides could not get over the final hurdle, and Royal Mail is saying they are ready to put the company into this government-handled administration.

“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 does go into insolvency, the government will have to take it over. My committee will have oversight of that process in the normal way,” said Darren Jones MP, the chair of the business, energy and industrial strategy select committee.

Royal Mail Threatens To Split Company

The company has even threatened to split the domestic and international business if significant operational changes cannot be agreed upon with the unions. Presumably, the international business has a greater value than domestic business.

Royal Mail said they were on track to incur operating losses of £350 million – £400 million this year, even before a ransomware attack crippled its deliveries from the UK to other countries earlier this year.

To date, the company has refused to pay the $80 million (£67m) ransomware believed to be asked by the hackers and instead worked for weeks to find an alternative means to send items overseas.

As of today, the company has resumed nearly normal operations to foreign destinations. But it was a giant struggle for the company to bring back its overseas operations, placing the company’s international operations in doubt for an extensively long time.

But to show just how ugly this thread has become, here is what both sides had to say regarding the current state of affairs.

“The company as a whole now have a decision to make – do they reach an agreement with the union or do they continue their relentless and daily assault on postal workers in workplaces across the UK? There is no positive future for Royal Mail without the support of the workforce,” the CWU countered this thread.

Royal Mail fired back, “We have been clear throughout the dispute that significant transformation of our network and working practices is essential for the business to survive. It is not sustainable for the business to be losing more than £1m a day. Change cannot continue to be delayed.

“If CWU persists with further strike action, this would only serve to threaten the job security of our postmen and women and make our pay offer unaffordable.”

And here we are. The two sides have apparently returned to an original sticking point in this whole situation. The actual losses the company claims versus what the union claims are just financial tactics to make the company appear to be in worse shape than it really is.

With months of negotiations apparently having turned sour now, it appears the union is ready to call for more strikes in April, potentially as early as this week.

115,000 CWU members could be back out next month striking. And that means, sending items to the UK could start being delayed again in April.

Royal Mail is the eighth-largest postal service in the world. With no one really knowing what a government-handled administration would look like, if this is the path Royal Mail decides to pursue, get ready for more disruptions in sending mail to the UK.