Royal Mail confirmed plans to cut 10,000 jobs by next year as losses continue to widen as a result of ongoing strike action and inflationary pressure.
Royal Mail’s parent firm International Distributions Services posted an operating loss of £163m in the half year, 152.4 per cent down from the previous year, where it had a profit of £311m.
Revenue was also down nearly four per cent to £5.7bn, with Royal Mail‘s delivery arm tumbling 10.5 per cent to £3.6bn.
Chief executive Simon Thompson said that he would do “whatever it takes” to turn the company around, confirming plans to shrink the workforce by 10,000 by August next year, with around 5,000-6,000 redundancies required this year.
Royal Mail entered into pay discussions with Communication Workers Union (CWU) earlier in the year over the firm’s 5.5 per cent pay rise.
CWU balloted its members twice on this offer, which it called “adequate” against soaring inflation, and has held eight days of industrial action this year.
The firm estimates that this action has had a direct net impact of around £100m on adjusted operating profit.
Thompson said conversations with the union are ongoing, with the CWU due to take further action over Black Friday – the biggest shopping day for online retailers and delivery partners.
The Royal Mail boss said the firm was working on contingency plans, but would not elaborate on any the progressing talks with the CWU.
Thompson instead said that the Universal Service requires “major reform”, and confirmed that the government had been approached to seek an early move to a five day letter delivery, down from six.
International Distributions Services continues to expect a full year adjusted operating loss of around £350m to £450m, including the direct impact of 12 days of industrial action, which have taken place or have been notified, but excluding any charges for voluntary redundancy costs
From an investor perspective, the delivery firm said it would not be paying an interim dividend, with the key focus on “stabilising Royal Mail”.
Losses balloon for Royal Mail as strike action continues to take its toll