Royal Mail set to cut 6,000 jobs in face of £350m losses

Royal Mail has announced plans to cut between 5,000 and 6,000 jobs by next August in a bid to reduce its costs.

In a trading update this morning parent group International Distribution Services warned it expects its full-year losses to hit £350million.

Royal Mail chief executive Simon Thompson said: “This is a very sad day. I regret that we are announcing these job losses.”

“We will do all we can to avoid compulsory redundancies and support everyone affected.”

“We have announced today losses of £219 million in the first half of the year. Each strike day weakens our financial situation.”

The trading statement says : “The position of Royal Mail has deteriorated due to a combination of the impact of the industrial dispute, an inability to deliver the joint productivity improvements” to which it had “agreed” with The Communication Workers Union (CWU).

“The business was unable to reduce costs quickly enough in line with deteriorating parcel volumes.”

“Despite the current financial position, to date, CWU has already taken 6 days of industrial action and formally notified Royal Mail of a further 2 days of damaging industrial action on 20 and 25 October, which are expected to go ahead.”

“Royal Mail expects to incur a full year adjusted operating loss of around £350 million, including the direct impact of eight days of industrial action which have taken place or been notified to Royal Mail, but excluding any charges for voluntary redundancy costs.”

“This may increase to around a £450 million loss if customers move volume away for longer periods following the initial disruption.”

“We will be starting the process of consulting on rightsizing (reduce the size of) the business.’”

“The CWU has threatened, but not yet notified Royal Mail, of a further 16 days of strikes in November and December. Additional days of industrial action beyond 25 October would increase the loss for the full year materially and may necessitate further operational restructuring and headcount reduction.”

“Wherever possible, we will look to achieve FTE (Full Time Equivalent) rightsizing through reductions in overtime, temporary staff and natural attrition.”

“However, based on current estimates, c.5,000-6,000 redundancies (frontline roles in delivery and processing) may regrettably be required by the end of August 2023.”

Royal Mail said: “We will do all we can to avoid compulsory redundancies, including offering a voluntary redundancy scheme.”

“The financial position of the business means that our legacy voluntary redundancy policy, which offered up to two years’ pay, is now unaffordable. We will consult with CWU on any new voluntary redundancy arrangements.”