Royal Mail revives speculation it could split up, saying ‘all options remain open’ including separation after huge loss
Royal Mail has unveiled plans to slash up to 10,000 jobs as it swung to a huge loss amid ongoing strikes.
The FTSE250 postal carrier also revived speculation it could split up, saying ‘all options remain open’ including separation.
Parent company International Distributions Services (IDS) revealed yesterday that Royal Mail had swung to a half-year loss of £219m from a £235m profit last year.
The losses included a £70m hit from three days of industrial action, with the company warning it was unable to provide an outlook to investors due to the ongoing dispute with the Communication Workers Union (CWU), which represents around 115,000 Royal Mail postal workers.
The losses were expected to balloon further to around £450m for the full year if customers turned away from the company due to ongoing disruption. As a result, IDS outlined plans for ‘rightsizing’ the business and to help deliver planned changes that the firm believes will allow it to better compete against rivals such as Amazon.
To save costs in the short term, the group plans to cut 10,000 jobs by the end of August next year, adding it expected to make up to 6,000 redundancies. In total, Royal Mail employs about 140,000 people.
The performance stood in stark contrast to IDS’ other business, international parcel delivery firm GLS, which was expected to turn a full-year profit of up to £356m.
‘These results further highlight the need for significant and urgent change’, an IDS spokesman said, adding that it would continue to push for talks with the CWU.
The spokesman said: ‘In the event that significant change within Royal Mail is not achieved, all options remain open to protect the value and prospects of the group, including separation of the two companies.’
Shares tumbled 11.6 per cent, or 24.42p, to 185.28p after the bleak update.
The announcement comes a day after CWU members launched another strike in a long-running dispute over pay and conditions. Royal Mail chief executive Simon Thompson said the CWU’s decision to continue striking would also increase the risk of ‘further headcount reductions’. But CWU general secretary Dave Ward accused the company of ‘holding postal workers to ransom’.