Royal Mail revives speculation it could split up

Royal Mail has unveiled plans to cut up to 10,000 jobs as it led to a huge loss amid ongoing strikes.

The FTSE250 postman also sparked speculation it could split up, saying that “all options remain open,” including divorce.

Parent company International Distributions Services (IDS) announced yesterday that Royal Mail had hit a half-year loss of £219 million, up from a profit of £235 million last year.

The losses include a £70 million hit from three days of industrial action, with the company warning it could not offer prospects to investors due to its ongoing dispute with the Communication Workers Union (CWU), which represents around 115,000 Royal Mail postal workers.

The losses were expected to rise further to around £450 million for the full year if customers were to move away from the business due to ongoing disruption. As a result, IDS outlined plans to “rightsize” the company and make planned changes that the company believes will make it more competitive with rivals such as Amazon.

To cut costs in the short term, the group plans to cut 10,000 jobs by the end of August next year, and is expected to offset up to 6,000 layoffs. In total, Royal Mail employs about 140,000 people.

The performance contrasted sharply with the other business of IDS, international parcel delivery company GLS, which was expected to achieve annual profits of up to £356 million.

“These results further highlight the need for significant and urgent change,” an IDS spokesperson said, adding that it would continue to push for talks with the CWU.

The spokesperson said: ‘In the event that significant change within Royal Mail is not achieved, all options remain open to protect the group’s value and prospects, including the separation of the two companies.’

Shares fell 11.6 percent, or 24.42p, to 185.28p after the dismal update.

The announcement comes a day after CWU members launched another strike over a long-running dispute over pay and conditions. Royal Mail CEO Simon Thompson said the CWU’s decision to go ahead with strikes would also increase the risk of “further cuts in staff”. But Dave Ward, general secretary of the CWU, accused the company of “holding postal workers to pay ransom.”