Royal Mail to cut 700 jobs as turnaround plan gathers pace

Royal Mail has benefited from a boom in parcel demand during COVID lockdowns, helping the group make up for a decades-long slide in letter volumes.

But as coronavirus restrictions have eased, parcel volumes have tapered off from the highs of 2020, while rising inflation has raised costs.

“Looking forwards, the delivery of our transformation and modernisation plans remain incredibly important in light of the fast-paced change we are seeing and ongoing inflationary pressures,” Chairman Keith Williams said in a statement.

Royal Mail expects its plans to help to save around 220 million pounds ($297 million).

Shares in the FTSE 100 company rose 5% by 0955 GMT.

The latest job cuts follow Royal Mail’s plans https://www.reuters.com/article/us-royal-mail-results-idUSKBN23W20L in 2020 to lay off 2,000 mostly back-office staff.

Labour union Unite, which represents Royal Mail managers, did not immediately respond to a request for comment on the new round of cuts.

“In streamlining the business, Royal Mail needs to ensure it doesn’t go too far and diminish its operational capability or spark widespread industrial action, the threat of which has hung over the business in the past,” AJ Bell analyst Russ Mould said.

Royal Mail has previously clashed with its largest union, CWU, over pay and operational changes, culminating in a December 2020 settlement.

Royal Mail said it had seen strong growth in the run up to Christmas, adding that parcel volumes and revenue had risen from pre-pandemic levels, although overall December-quarter revenue fell 2.4% from 2020 when virus curbs were in place and parcel volumes were higher.

The British company also said there were staff absences in December and January due to the spread of the Omicron variant.

Royal Mail said its UK business is expected to report annual adjusted operating profit of 430 million pounds, lower than an earlier forecast of 500 million, due to restructuring costs.

($1 = 0.7411 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Shailesh Kuber and Jane Merriman)