Royal Mail issues stark warning as workers prepare to strike again

Royal Mail bosses have warned it is in a struggle for survival as postal workers prepare for further strikes.

While City analysts stated the 506-year-old group was in ‘terminal decline’, Royal Mail CEO Simon Thompson and senior managers told staff they are now ‘fighting for the survival of this business’.

The company warned that neither the government nor regulator Ofcom would come to its rescue, underscoring the threat to its future.

Dating back to the reign of Henry VIII, Royal Mail is struggling to compete with more nimble rivals and is embroiled in a bitter dispute with the unions over pay and conditions.

The spat has led to 17 days of strikes so far this year, with numbers 18 and 19 set to take place today and tomorrow.

The strikes paralyzed the service over the Christmas period, leaving piles of letters, cards and parcels undelivered.

Royal Mail has appealed to the government to ease the pressure on it by reducing a legal obligation to deliver letters six days a week, part of its ‘universal service obligation’ imposed by regulator Ofcom, but this was rejected last week by Business Secretary Grant Shapps.

“There is no one else who can save this company,” said a letter from Thompson and eight other senior executives. ‘Politicians and the regulator have been very clear. It’s up to us.’

The warning is the latest effort by the company and its parent company, International Distribution Services (IDS), to convince staff to return to work and end the long-running dispute with the Communication Workers Union (CWU), which representing approximately 115,000 Royal Mail. employees.

The CWU voted to strike in July after rejecting an offer of a 2 percent wage increase, sparking multiple strikes.

A “last and best offer” from the company for a 9 percent pay increase over 18 months, made in November, has also been rejected.

A new vote is scheduled for January, raising the likelihood of more disruption. Royal Mail has said change is needed to compete with rivals, while the CWU has said staff will be converted into ‘gig economy’ workers with less reliable hours and wages.

But analysts have warned that the longer the dispute goes on, the less viable it will be in the long run.

Royal Mail has already warned it was losing more than £1 million a day, claiming strike action has cost it £100 million in the six months to September 25.

Some businesses have stopped using its services to avoid disruption over the holiday season, with retailer Currys dropping it ahead of the Christmas rush.

IDS has also said on multiple occasions that it could spin off Royal Mail from its more profitable international business, GLS.

“The traditional business you and I know as Royal Mail – letter door delivery – feels like a business in terminal decline, a decline that can only be exacerbated by the ongoing industrial action,” said Rob Burgeman, investment manager at asset manager Brewin. Dolphin.

He added that management should “stop the bleeding of cash from the company” and “seriously consider” splitting it into separate parcel and mail delivery arms.

“In any case, investors will be able to choose between a legacy company and one with solid growth potential in the coming years,” said Burgeman.

Royal Mail’s woes have also led to speculation that Czech billionaire Daniel Kretinsky, IDS’s largest shareholder with just over 23 percent, could make a takeover and divest the troublesome UK business, leaving him with GLS.

IDS shares fell 1.7 percent, or 3.6 pence, to 207.8 pence.