Vultures circle Royal Mail after bosses run down service

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Billionaire asset-stripper Daniel Kretinsky made an offer to buy up Royal Mail’s parent company

The owners of Royal Mail have run down the service to such a level that equity firms are now circling, hoping to pick it up for a knock-down price.

Despairing postal workers have for months been talking about how their job has become impossible.

They’ve described areas that for weeks received no letter deliveries because managers told them to prioritise parcels.

And they’ve told of the dilapidated state of Royal Mail buildings and its fleet of vehicles, and how bosses have culled the most experienced workers.

Now, with the service on its knees and public dissatisfaction rising, the vultures have arrived.

Billionaire asset-stripper Daniel Kretinsky this week made an offer to buy up Royal Mail’s parent company, International Distributions Services (IDS). The bid was so low that IDS had to reject it, but that’s unlikely to put off Kretinsky.

The owner of West Ham football club already has a 27 percent stake in the business, which includes both Royal Mail and a US-European delivery firm called GLS.

Kretinsky’s plan is obvious. Break up IDS and sell the profitable GLS to one of its rivals, and then set about Royal Mail.

He believes that Ofcom, the postal regulator, will reduce the universal service obligation, so that Royal Mail will no longer have to deliver to all areas of the country, six days a week.

Once that happens, Kretinsky will be able to carry out what bosses euphemistically call a “restructuring”. It will mean cutting thousands more jobs, closing offices and depots, and reducing the service to the legal minimum.

The letter delivery side of the operation will be decimated, but the profitable parcels business will remain.

And for Kretinsky’s plan to reap the kind of profits he demands, he will attempt to smash the CWU union.

He wants to drive Royal Mail workers’ conditions down to the levels of its gig economy rivals. That will likely mean zero hours contracts and an end to all union agreements.

We can know the features of Kretinsky’s plan because they are precisely those of every set of Royal Mail bosses for more than a decade since privatisation.

Socialist Worker, in November 2022, outlined a similar scheme being proposed by then Royal Mail boss Simon Thompson.

We wrote of the bosses, “Their solution to Royal Mail’s problems begins with 10,000 redundancies—the union says it will eventually be 20,000—and axing Saturday deliveries.

“Most importantly it means ‘Uberisation’, driving down the conditions of postal workers to those imposed in the gig economy and competitor parcel firms,” we said.

“If you’re a profit-hungry boss or a vulture financier, you don’t start from worrying about Royal Mail as a public service. You think about asset-stripping and dividing up the company to unlock super-profits.”

Now, instead of that project being driven by Royal Mail’s current bosses, Kretinsky wants to ram through the changes himself.

The CWU can of course see the dangers. It sent out a message opposing Kretinsky’s bid as soon as news of it went public. But there are real dangers in the union’s approach.

During last year’s dispute the union prioritised “saving” Royal Mail from financial collapse. In its agreement with the bosses, it signed away hard won terms and conditions in the belief that it would make the company more “stable”.

Yet, instead of making Royal Mail financially viable, the deal made the union appear weak.

And that in turn has made the firm more attractive to asset-stripping investors.

The union also says, “handing over the ownership of one of the UK’s most prestigious institutions to a foreign equity investor cannot be right.”

This kind of flag-waving will get the CWU nowhere. Neither the government nor IDS bosses care about who or where they sell Royal Mail to, and a buyer’s nationality will make no difference to workers either.

We all know that private equity firms the world over work on the same principle—break up the business, sell what’s profitable, and gut the rest.

It makes no difference whether the axe man is from Britain or the Czech Republic like Kretinsky, the effect is the same.

The CWU can do so much better than this. The union’s strength was built by militant reps, unofficial walkouts, and shopfloor confidence. If Royal Mail is to be saved, it’s those traditions that must be revived.