Is Royal Mail ready for a delivery of bad news?

Royal Mail faces a critical week after CEO Simon Thompson stepped down, just days before the company plans to announce the cost of a series of unprecedented strikes.

Parent group International Distributions Services announced on Friday that the controversial boss will leave Royal Mail at the end of October.

Thompson became CEO in early 2021, when the company was still benefiting from an explosion of online shopping during the pandemic, but his two-year tenure became increasingly turbulent.

His departure was rumored, but many did not expect it to be formally announced until the company’s annual results are revealed on Thursday.

The figures will expose the damage inflicted on the 507-year-old postal service by a dismal year in which it was plagued by 18 days of strikes, a slump in parcel delivery and a cyber-attack on its international delivery business.

Months of chaos forced Royal Mail to warn it was losing more than £1million a day and could be forced to call in administrators if the situation didn’t improve.

The debacle hit the share price, with IDS shares now worth nearly 30 percent less than a year ago.

The company’s largest shareholder is Daniel Kretinsky, better known as the Czech Sphinx, who has built up a 25 percent stake in the group, prompting speculation that he may be considering a takeover.

Analysts predict Royal Mail will report a loss of half a billion pounds for the year to the end of March, according to data from Refinitiv. This compared to a profit of £416 million in the previous year.

Listed on the FTSE 250, IDS is worth £2.3 billion. The company estimates Royal Mail will make a loss of £350m to £450m this year. City observers will be seeking details of the cost of the dispute with its workers after Royal Mail said in January that union actions in the last nine months of last year had cost £200 million.

Mass strikes at Royal Mail followed a confrontation with the Communication Workers Union – representing 115,000 postal workers – over plans to modernize the company in a bid to make it more competitive.

A deal struck last month included a 10 percent pay raise for staff. CWU members are now going to vote on whether to approve it.

IDS will do everything it can to find a suitable replacement for Thompson as the company tries to restore its reputation.

Another focus for analysts will be how well the group’s parcel and letter delivery businesses have performed despite the ongoing issues.

A City analyst told The Mail on Sunday that IDS needs to appoint someone who can mend relations with staff and unions, adding: “There needs to be a focus on winning hearts and minds.”